CHICAGO, August 27, 2024 – Real estate transparency is more critical than ever in times of uncertainty, and markets emerging as the most transparent are pulling further ahead based on investments in technology integration and AI, data availability and sustainability. This is according to JLL and LaSalle’s (NYSE: JLL) biennial, proprietary Global Real Estate Transparency Index (GRETI), which benchmarks market transparency to help inform how real estate is invested in, developed, and occupied in different regions around the globe.

While transparency has increased across most nations and territories since JLL’s 2022 report, the index finds that Europe remains the most transparent region, and highly transparent commercial real estate markets have seen the strongest progress. Among the global top improvers are the U.S., Canada, France, and Australia, while Singapore has entered the ‘Highly Transparent’ group for the first time, boosted by a focus on sustainability and digital services. The top set of countries has attracted over $1.2 trillion in direct commercial real estate investment over the last two years, representing over 80% of the global total, positioning them to lead the cyclical recovery in liquidity as capital market activity increases.

The proliferation of AI has been rapid, hastening expectations for its impact on real estate with the influence of tools including JLL’s AI platform, JLL GPT. It is estimated that over 500 companies are currently providing real estate-specific AI services, and with investment growing significantly, early findings suggest AI will boost transparency across the industry with its ability to review and summarize large volumes of data and analytics, automate building management, and power urban and architectural design. However, experts and policymakers have raised the risks of AI and introduced policies such as the U.S. Executive Order on AI and recently approved EU AI Act to ensure the responsible deployment of the technology to maintain transparency.

In parallel, sustainability marked the largest improvement in the 2024 Index, as nations race to halve carbon emissions by 2030 to meet the Paris Agreement, and the introduction of mandatory decarbonization pathways set new building performance standards, sustainability reporting requirements, and corporate commitments. France, Japan, and the U.S.- with 40 U.S. cities committed to passing a Building Performance Standard requiring building energy use or emission reductions by 2026 – emerged as leaders in sustainability for implementing energy performance requirements for both existing and new buildings, energy use reporting, and biodiversity protection and restoration. These markets with the clearest long-term pathway to more sustainable real estate will offer the most transparent and predictable environments, allowing occupiers to make decisions with confidence, governments to meet decarbonization targets, and investors to future-proof their portfolios.

However, despite significant progress made, sustainability metrics continue to be among the least transparent globally. Beyond the most transparent markets, mandatory building performance standards, public disclosure of buildings’ energy use, climate risk reporting, and resilience planning are still limited. The rate of building decarbonization retrofits will need to triple to align with net zero carbon pathways, while demand for green buildings significantly outstrips demand – only 30% of demand for low carbon office space in the major global markets is likely to be met by 2030. Looking ahead, sustainability transparency is expected to grow over the next two years across the world’s largest economies including the U.S., EU, U.K., China, Japan, Korea, Canada, and Australia as new requirements are enacted.

With these emerging trends, such as technology integration and sustainability, comes diversification, as investors look to identify assets that will benefit most from these long-term themes. This is resulting in an expansion of the investible universe, and a significant reallocation of capital; the share of global investment into the industrial and living sectors has risen from 29% ten years ago, to account for 50% of global direct investment over the past year, while institutional investors are increasingly active in emerging asset types such as data centers or lab space.