Why Europe should follow the Dutch focus on data
There’s a key differentiator that helps promote real estate markets as transparent, attractive places to do business: wide-ranging, easily available and reliable property data.
As European countries compete for real estate investment, there’s a key differentiator that helps promote their real estate markets as transparent, attractive places to do business: wide-ranging, easily available and reliable property data.
It’s something the Netherlands knows well, having made huge strides forward in the space in the last couple of years. And now it’s paying off as real estate interest in the country soars with more than US$21 billion of direct commercial real estate investment into the country in 2017 alone.
Much of the focus on transparency has been driven by the needs and demands of international investors – some of them investing for the first time in the country.
“Over the past couple of years, new capital has come to the market, and with it comes more professionalism and the expectation of a certain level of service,” explains Sven Bertens, Research Director at JLL in The Netherlands. “New players have really pushed transparency to the next level.”
Upping the ante
The country ranks as one of the top 10 most transparent markets, according to JLL and LaSalle’s Global Real Estate Transparency Index, yet it’s taken a concerted effort on the part of many different private and public sector parties in the industry.
“A decade or so ago, many transactions were not underwritten properly,” explains Bertens. “The market was healthy and so data was considered of less relevance.”
Improved investment performance measurement and a new layer of information are keeping investors more informed and have transformed decision-making, says Bertens.
“The quality of data is getting better and better,” he says. “Information is now being captured more quickly and is more readily available to investors.”
Kadaster, the Dutch land registry, has kept track of all buildings since 1993. However, it is only recently that the registry’s digitalisation has become a go-to destination for information on individual properties. Now, with one eye on the future, the registry is beginning to experiment with blockchain.
Corporate occupiers, particularly those looking for European headquarters, have also contributed to rising levels of transparency. Interest in office space is strong from both domestic and international firms, as they seek to tap into the Netherlands’ highly skilled talent pool and world-class operating environment.
“Taxation rules have improved and that’s helped corporate occupiers,” says Bertens. “Large corporate tenants need stability, while the quality of the labour pool in The Netherlands has reinforced appeal.”
Technology with an edge
The home of employee engagement tool Office App and analytical tool Vastgoeddata, the Netherlands has further strengthened its transparency credentials by embracing new technologies.
“Amsterdam is a leading proptech city, it’s almost become part of our DNA,” says Bertens. “A large, thriving proptech scene has helped add a new level of information to the market and there’s a strong collaborative nature to the way the sector operates.”
More joined-up thinking is proving successful for the country´s Holland Metropole which links up Amsterdam, The Hague, Rotterdam and Utrecht. Whereas in the past, the four cities would compete for global occupiers, municipalities today are working more in tandem.
“They all have their own characteristics, but they all fit together – although that was not always the case,” says Bertens. “It´s become more of a region – a powerful one – and that helps paint a clearer picture of options for occupiers looking to take space here. There´s more dialogue around which areas are the best fit for which sector. So there´s definitely transparency there too.”
The Netherlands is not the only European country upping its game on transparency. Many of the biggest improvers in JLL’s latest index are from Central and Eastern Europe (CEE).
“The rate at which transparency has improved across the region is impressive and to get to where they are in such a relatively short period of time is phenomenal,” says Kevin Turpin, Head of CEE Research at JLL.
Since JLL’s last study, Romania, Serbia and Slovakia have made significant improvements to their respective transparency levels catching up with Poland and the Czech Republic.
“The pace of change for smaller markets, such as Serbia and Slovakia, is much faster due to where they are in the transparency contest,” says Turpin. “More mature markets in the region, such as Poland, may have naturally slowed down having reached a certain level of transparency.”
Yet new measures such as the launch of Real Estate Investment Trusts could provide fresh momentum, with residential REITs in Poland more likely a first step.
In the meantime, the Czech Republic’s “qualified fund” vehicles, sponsored by central banks, have brought additional levels of transparency and domestic capital, says Turpin. “Fund results publications have improved as a consequence and that gives investors more insight.”
Indeed, international capital is bringing greater expectations. “International investors expect similar standards or better than they are used to in their own domestic markets,” Turpin says. “Capital from Austrian, German, UK and US, as well as Asian investors, to name a few, is active in the region, and some of those investors expect all markets to have consistent standards. However, different regulatory systems across the region mean that that´s not always the case.”
A new transparent world?
As investor allocations to real estate rise, so do the demands on countries to offer a coherent and comprehensible market. Ongoing improvements to the quality and quantity of information remain key to better transparency.
“Even if it’s at a small cost to end-users, to have data more available is a positive step. More data – aided by advances in technology – can only be a positive for the region’s various markets,” concludes Bertens.