On September 5, 2024, Jones Lang Lasalle (JLL) released its latest “Transparency Survey,” evaluating information disclosure in real estate markets around the world. The survey assesses various metrics, including market data availability, transaction transparency, and environmental sustainability, all on a scale of 1 to 5 (with 1.00 being the highest score). Japan, ranking 11th globally, has jumped up two spots from the previous survey in 2022 and emerged as the highest-ranked country in Asia. But what does this ranking mean, and how does Japan measure up against other major countries?
How Has Japan Ranked So High?
Japan’s high overall ranking is primarily attributed to its advancements in environmental sustainability. Notably, progress in climate risk disclosures by listed companies has significantly boosted Japan’s sustainability score, elevating it from 6th to 2nd place in this category. Additional environmental improvements, such as the mandatory insulation for all newly built homes, have further contributed to Japan’s rise. Japan, with a score of 1.26 in the sustainability category, narrowly trails France, which has a score of 1.24. The United States follows as the next competitor, scoring 1.34.
Additionally, Japan was highly rated by JLL for its commitment to boosting the environmental certification of buildings and strict adherence to regulations. Listed companies have made notable progress in disclosing information on climate change risks, reflecting a broader commitment to transparency and sustainability.
Japan’s Area for Improvement: Transaction Transparency
Despite its strong overall performance, Japan faces challenges in certain areas of real estate market transparency, particularly in the transaction process. Japan ranks 33rd in this category due to insufficient disclosure of sales and rental contracts and management fee charges.
Unlike in the United States, where previous sale prices of properties are often publicly available and included in real estate databases, sales contracts in Japan typically do not disclose transparent information about a property’s prior sale prices. This lack of disclosure can make it particularly challenging to determine the transaction history of properties.
Corporate governance and market data disclosure also lag behind other major countries. For instance, the US ranks significantly higher at 21st place, while the top 10 nations in this category are predominantly European.
The United Kingdom, leading this category, achieved a perfect score of 1.0, whereas Japan scored 1.8. According to JLL, improvements in the use of IT, such as real-time data visualization, could be vital in enhancing Japan’s transaction transparency score.
In a Global Context
Japan’s ranking of 11th globally reflects a notable achievement in transparency, particularly when compared to other major markets. Among Asian nations, Japan leads as the highest-ranked, surpassing Singapore, which placed 13th and joined the “high” transparency group for the first time. The United States, recognized for its comprehensive market data availability and robust transaction processes, ranks 7th overall, demonstrating a more balanced performance across all categories.
Overall, European nations dominated the top rankings, with the United Kingdom and France securing the 1st and 2nd positions, respectively. This European dominance underscores the high standards of transparency in these markets, thus setting an ideal standard to meet for outside nations such as Japan.
Compared to the 2022 survey, India made the biggest leap, rising from 36th to 31st. Other countries like Saudi Arabia and Dubai also climbed in the rankings, driven by their use of real estate technology to simplify data and regulations.
Conclusion
Japan’s continued progress in the JLL Transparency Survey highlights its commitment to enhancing market transparency through environmental sustainability and regulatory improvements. However, the country still faces challenges in improving transaction process transparency, significantly lagging behind other highly developed nations. Despite these challenges, Japan’s ranking as the top Asian country for real estate transparency underscores its growing influence and dedication to setting higher standards in the global real estate market.
