The Path to Real Estate Transparency across Sub-Saharan Africa - Global Research 2018 - JLL

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The Path to Real Estate Transparency across Sub-Saharan Africa - Global Research 2018 - JLL
The Path to Real Estate Transparency
across Sub-Saharan Africa

Global Research 2018
The Path to Real Estate Transparency across Sub-Saharan Africa - Global Research 2018 - JLL
2

 Nairobi

Contents
Executive Summary                                                            4

Why is real estate transparency important?                                   7

Real estate transparency across Sub-Saharan Africa                           8

Recent trends in transparency improvements                                   10

The future shape of real estate transparency                                 15

Improving valuation standards boost transparency across Sub-Saharan Africa   20
The Path to Real Estate Transparency across Sub-Saharan Africa - Global Research 2018 - JLL
The Path to Real Estate Transparency across Sub-Saharan Africa 2018

Introducing the Global Real Estate Transparency Index

For the past two decades, JLL and LaSalle have played a leading role in the
pursuit of greater transparency and higher ethical standards in the global
real estate market. Our Global Real Estate Transparency Index is a unique
survey that quantifies real estate market transparency across 100 markets
worldwide, updated every two years. The 2018 Index is our tenth edition.

For more details visit:
www.jll.com/transparency
The Path to Real Estate Transparency across Sub-Saharan Africa - Global Research 2018 - JLL
4

Executive Summary

Transparency is improving in Sub-Saharan Africa, but failing to match rising
expectations
    •   The 2018 Real Estate Transparency Index reveals a Sub-Saharan African real estate industry
        that is gradually making progress, with 10 out of 15 markets registering an improvement since
        2016. However, the pace of change needs to accelerate to close the gap with other regions and
        meet rising expectations in an environment where investors, business and communities are
        demanding higher standards.

Nigeria and Kenya advance, while Rwanda is making its mark
    •   Improvements have been led by the West and East African hubs of Nigeria and Kenya, supported
        by greater data availability, improved valuation standards and government digitisation initiatives.
        Rwanda also continues to progress due to strengthened regulatory systems, sustainability
        improvements and the introduction of online services.

Proptech and digitisation offer an opportunity to leapfrog traditional routes to
transparency
    •   New technologies – such as blockchain for land registries or ‘smart’ buildings and infrastructure
        – together with the digitisation of existing processes, offer an opportunity for Sub-Saharan
        Africa to leapfrog traditional routes to transparency and improve methods of collecting market
        information.

Sub-Saharan Africa needs to catch up on sustainability regulations and
benchmarking
    •   The transparency of sustainability regulations and practices remain at an early stage. With
        significant structural demand for modern infrastructure, housing and commercial real estate,
        progress is needed to ensure high-quality and sustainable new construction and urban
        environments.

Greater regulatory enforcement and deepening liquidity is essential for
meaningful change
    •   Further advancements in the ability to put new and existing regulations into practice is necessary
        for many Sub-Saharan African markets to meaningfully raise their transparency levels. Increasing
        market participation by institutional investors and the development of the listed sector will also
        be key factors in enhancing transparency.
The Path to Real Estate Transparency across Sub-Saharan Africa - Global Research 2018 - JLL
The Path to Real Estate Transparency across Sub-Saharan Africa 2018

 Real Estate Transparency in Sub-Saharan Africa

                                                                       Nigeria
                                                                       • Online publication of statistics on
 Ghana                                                                   land transfers and regulatory permit
 • New legislation to                                                    requirements
   facilitate formation                                                • Passage of Real Estate (Regulation
   of REITs in 2018                                                      and Development) Bill, 2018
                 SN                                          0<

                                                                                                     Uganda
                                            NG                                      ET               • Passage of legislation
                            CI   GH                                                                    enabling establishment
SN                               0<                                                                    of REITs in 2017

                      NG                        ET                           UG    KE
      CI    GH                                                         RW
                                                                                              Kenya
                                           UG
 Rwanda                           RW
                                         KE                                                   • Progress on online land registry
 • Introduction of Green Star South Africa                                        TZ            and eCitizen service for property
   green building certification system TZ                                                       transfers and land tax payments
 • Regulatory and building quality                     AO                                     • Establishment of Kenya Green
                          AO
   control systems strengthened          MZ                                         MZ          Building Society and introduction
                                ZM                                ZM
 • Introduction of online services for                                                          of Green Star South Africa
   property transfers                                                                           building certification system
                              BW
 • New building codes and urban                         MU
   planning systems                                            BW
                                      ZA                                                                   MU

     Transparent                                                  ZA
                                                                                       Mozambique
     Semi-Transparent
                                                                                       • Streamlined
     Low Transparency
                                                                                         procedures at the
     Opaque                                                                              land registry
                           Transparent
                           Semi-Transparent
 Source: JLL, LaSalle Investment Management

                           Low Transparency
                           Opaque
           How do we measure transparency?
           The JLL Global Real Estate Transparency Index is based on a combination of quantitative
           market data and information gathered through a survey of the global business network of
           JLL and LaSalle Investment Management across 100 countries and 158 city markets. For each
           market we use 186 separate factors, both quantitative datapoints and survey questions, to
           calculate the composite score. The survey data and quantitative measures complement each
           other. For instance, knowing the market coverage and length of a country’s direct real estate
           index is only one half of the story; for a complete picture, we also gather qualitative data on
           whether investors actually trust and use the index. Local research teams, in consultation with
           business leaders and real estate professionals active in each market, complete the survey.
6

    “Governance and transparency remain one of the biggest hurdles to
     economic development on the continent. Investors, both international and
     local, need to trust Africa before parting with their capital. Success will
     flow from this. It is heartening to see that two of our region’s economic
     powerhouses, Nigeria and Kenya, are the top two regional improvers, but
     it is evident that more needs to be done before Africa begins competing on
     a global scale.

    We are proud as JLL to be contributing to improvements in transparency
    in the many markets we operate in. We believe in the Africa story and
    will continue to provide our clients with the service they require to feel
    confident in their investments.”
     Craig Hean
     CEO: South Africa and Sub-Saharan Africa, JLL

    “We have seen tangible improvements in transparency and governance on
     the sub-continent, especially in the countries where we have an established
     footprint, such as Kenya and Zambia. Since the global financial crisis, the
     region has experienced several economic cycles that have supported the
     establishment of relative levels of market depth and maturity.

    Greater political stability in the region also plays an important role as
    it allows for consistent policy implementation. We have noticed a strong
    political will to curb corruption in a number of countries. Transparency
    and effective anti-corruption policies not only increase the ease of doing
    business within a specific country, but also level the playing field as far as
    competition is concerned, which ultimately benefits the end-user.”

    Mark Truscott
     Business Development Manager, Developments, Improvon

    “One of the reasons we started our specialised warehousing property
     company in Kenya two years ago was that we felt transparency was
     improving both in Kenya and the wider continent, which would help
     support our institutional investment platform and assets. There is still
     much room for improvement of course, particularly around land registry,
     title and planning processes, which should be digitised to reduce fraud
     cases. But overall the fog over transparency in Africa is starting to lift and
     the trend is heading in the right direction.”

    Toby Selman
     CEO, Africa Logistics Properties
The Path to Real Estate Transparency across Sub-Saharan Africa 2018

Why is real estate transparency important?

There is a growing acknowledgement of the central role a transparent real estate sector plays in providing
healthy, productive and competitive environments for communities and businesses. Market transparency
is the foundation which allows investors and corporate occupiers to operate and make decisions with
confidence. It enables governments and public bodies to function effectively, providing long-term benefits
to local communities and the environment through enhancing security of property ownership, safe
housing and workplaces, and reliable and professional services.

                Boosts                                                                 Improves
            Investment                                                                 Business
                                                                                       Efficiencies

                                          Real Estate
                                         Transparency

            Advances                                                                   Safeguards the
               Living                                                                  Environment
            Standards

                                          Raises Employee
                                            Well-Being

Our latest survey reveals a Sub-Saharan African real estate industry that is gradually making progress.
However, transparency across the region is advancing at a more muted pace than in previous years and
progress is still too slow in an environment where investors and businesses, as well as communities, are
demanding much higher standards.

Further improvement in real estate transparency will be an integral component in the region’s drive for
greater business efficiency, as well as spurring the investment needed to meet the rapidly growing demand
for high-quality urban infrastructure across Sub-Saharan Africa. It will also play a pivotal role in boosting
living standards and safeguarding the environment.
8

Real estate transparency across
Sub-Saharan Africa

Markets in Southern and East Africa take top positions
While there are wide disparities in transparency within Sub-Saharan Africa’s sub-regions, Southern
and East Africa account for the top five markets.

    •   South Africa (21st) remains the only ‘Transparent’ country in Sub-Saharan Africa (SSA),
        with a significant institutional investor base and listed sector helping it score among
        the top 20 global markets in the ‘Investment Performance Measurement’, ‘Corporate
        Governance’ and ‘Regulatory and Legal’ sub-indices.

    •   Botswana (45th) and Mauritius (51st) round out the three most transparent markets and
        are positioned in the ‘Semi-Transparent’ tier, benefitting from stable regulatory systems
        as well as greater involvement from international consultancies and asset managers,
        with Mauritius in particular a base for many SSA-focused funds.

    •   In SSA’s other ‘Semi-Transparent’ markets, improvements in the availability of market
        fundamentals data, valuation quality and the tenant transaction process have seen
        Kenya (53rd) overtake Zambia (56th).

Real Estate Transparency in Sub-Saharan Africa, 2018

Transparency Tier        Global Rank         Market              Score
    Transparent               21             South Africa        2.21
                              45             Botswana            3.06
                              51             Mauritius           3.23
         Semi                                                                     Kenya sees continued progress due
                              53             Kenya               3.29             to an improved transaction process
                                                                                  and greater data availability
                              56             Zambia              3.41
                                                                                  Nigeria is the top regional improver as
                              67             Nigeria             3.73             third-party providers enhance market
                                                                                  coverage and valuation quality
         Low                  76             Ghana               3.99
                              78             Rwanda              4.06
                              84             Uganda              4.20
                              85             Angola              4.25
                              90             Tanzania            4.37
        Opaque                92             Ethiopia            4.47
                              96             Ivory Coast         4.53
                              97             Mozambique          4.53
                              98             Senegal             4.59

Source: JLL, LaSalle Investment Management
The Path to Real Estate Transparency across Sub-Saharan Africa 2018

Majority of Sub-Saharan Africa markets are ‘Low Transparency’ or ‘Opaque’
The majority of markets in SSA continue to be in the ‘Low Transparency’ or ‘Opaque’ categories.

                                 •    Nigeria (67th), Ghana (76th) and Rwanda (78th) have all registered improvements over the last
                                      two years, but have maintained their positions in the ‘Low Transparency’ tier.

                                 •    Meanwhile, the early stage of commercial real estate market development in several high-
                                      growth East and West African markets, including Uganda (84th), Tanzania (90th), Ethiopia (92th),
                                      Ivory Coast (96th) and Senegal (98th), contributes to their place in the ‘Opaque’ category.

Real Estate Transparency by African Sub-Region, 2018

                                2.0
Transparency Score (Inversed)

                                                                                South Africa

                                                                                                                                          Transparent

                                3.0
                                                                                Botswana
                                                                                                                      Mauritius
                                                                                                                      Kenya
                                                                                Zambia                                               Semi-Transparent

                                              Nigeria

                                4.0           Ghana
                                                                                                                      Rwanda         Low Transparency
                                                                                Angola                                Uganda
                                                                                                                      Tanzania
                                              Ivory Coast                       Mozambique                            Ethiopia
                                              Senegal

                                                                                                                                             Opaque
                                5.0
                                           West Africa                       Southern Africa                       East Africa

    Source: JLL, LaSalle Investment Management
10

Recent trends in transparency improvements

Advances led by regional hubs – Nigeria and Kenya
Following solid gains in previous surveys, our latest Real Estate Transparency Index reveals that the Sub-
Saharan Africa region has seen more limited advancement over the last two years, with improvements led
by the West and East African hubs of Nigeria and Kenya.

Out of the 15 Sub-Saharan African markets included in the Index, 10 have seen some level of progress
in real estate transparency levels, although none were among the top global improvers. Advances in
the ‘Market Fundamentals’, ‘Investment Performance Measurement’ and ‘Transaction Processes’ sub-
indices have contributed to the regional improvements, as international service providers deepen their
involvement in markets across the region and government data initiatives push forward digitisation and
more open information.

Real Estate Transparency in Sub-Saharan Africa
Average Transparency Score

More Transparent 3.2                                                                                              7%

                                                                                                                       Improvement in Average Transparency
                                                                                                          3.4     6%
              Transparency Score (Inversed)

                                              3.4                                     3.5
                                                                                                                  5%

                                                                       3.6                                        4%
                                              3.6
                                                                                                                  3%

                                                                                                                  2%
                                              3.8    3.9
                                                                                                                  1%

Less Transparent 4.0                                                                                              0
                                                    2012              2014           2016                2018

                                                           Average Change in Score   Average Transparency Score

Regional average based on 8 markets with data history to 2012.
Source: JLL, LaSalle Investment Management
The Path to Real Estate Transparency across Sub-Saharan Africa 2018

  Selective improvement continues
  While overall progress in real estate transparency across the region has been more muted over the past two
  years than in previous surveys, advances have continued to be made in several areas:

  •                               Accessibility and quality of real estate data

                                 ––   Market fundamentals data: The availability, quality and depth of real estate market data has once
                                      again shown the greatest improvement, with international service providers increasing their coverage
                                      of sectors including offices, hotels and logistics.

                                 ––   Financing conditions: There has been a rise in the availability of information collected by market
                                      participants on financing conditions across the region, including lender expectations and typical
                                      financing terms.

                                 ––   Government open data and technology initiatives: Government data initiatives have been
                                      important in increasing data availability and smoothing transaction processes. Markets including
                                      Kenya, Botswana, Rwanda, Mauritius, Ivory Coast and Uganda have taken steps to digitise their
                                      land registries, while the efforts of Nigeria and Ghana to more openly publish statistics and regulatory
                                      requirements online are part of a broader move towards online ‘one-stop shops’ for carrying out
                                      queries or making tax and service payments.

  The transparency journey of Sub-Saharan Africa’s real estate markets
                                              2012                      2014                        2016                          2018
                                2.0
Transparency Score (Inversed)

                                                                                                                                               South Africa
                                                                                  Transparent
                                                                                                                                               Global
                                2.5

                                                                                                                                               Botswana
                                3.0                                            Semi-Transparent
                                                                                                                                               Mauritius
                                                                                                                                               Kenya
                                                                                                                                               SS Africa
                                3.5                                                                                                            Zambia
                                                                                                                                               Nigeria
                                                                               Low Transparency
                                4.0                                                                                                            Ghana

                                                                                                                                               Angola

                                4.5
                                                                                   Opaque

                                5.0

  Global average based on 50 markets included since 2004; regional average based on 8 SSA markets with data history to 2012.
  Source: JLL, LaSalle Investment Management
12

•      Valuation standards (see feature article, page 20) – Valuation standards are rising, with new standards
       being introduced, greater competition, more use of third-party providers and increased frequency of
       valuations.

•      Sustainability – GRETI 2018 marks the inclusion of sustainability tools as a component of the Index.
       Rwanda and Kenya are among the few markets globally to see an improvement in the ‘Sustainability’
       sub-index due to the introduction of the Green Star South Africa green building certification scheme.
       Across the region, green building councils have now been established in Mauritius, Kenya, Rwanda,
       Zambia, Ghana, Tanzania and Namibia.

•      Transaction processes – Sales and facilities management processes continue to see increased
       competition and further steps being taken to improve transparency, for example in tenants’ service
       charges or the bidding and due diligence process, as international service providers contribute to
       higher standards.

Sub-Saharan Africa’s Transparency by Topic Area
Versus Transparent Markets

Transparent 1.0
         Transparency Score (Inversed)

                                         2.0

                                         3.0

                                         4.0                     Transparent Markets   Sub-Saharan Africa

     Opaque                              5.0

                                               Eminent            Regulation        Land and         Corporate            Overall            Listed RE          Direct
                                               Domain                               Property         Governance                              Securities       Property          Unlisted
                                                                                   Registration                                               Indices          Indices        Fund Indices
                                                                                                                                                       Market
                                                         Valuations         Occupier           Sales         Financial                Debt          Fundamentals
                                                                            Services        Transactions     Disclosure             Regulation          Data        Sustainability

Source: JLL, LaSalle Investment Management
The Path to Real Estate Transparency across Sub-Saharan Africa 2018

 Further progress on data availability and regulatory enforcement required
 Despite these signs of continuing progress, Sub-Saharan Africa has registered the slowest improvement of
 any global region in GRETI 2018, with several areas where there is significant opportunity to close the gap
 with other regions.

 Sub-Saharan Africa remains the global region with the lowest level of market data availability, with
 challenges for data collection which include relatively few independent research firms with the requisite staff
 and budgets to collect comprehensive and accurate data, a lack of industry forums for sharing information,
 low government data collection capabilities for urban infrastructure and relatively undeveloped listed public
 REIT markets, which typically raise data standards and availability through public reporting.

 Availability, quality and depth of market fundamentals data by region

 SS Africa

     MENA

  Americas

Asia Pacific

    Europe

               0.0               0.5                   1.0                    1.5                     2.0                    2.5
                                              Average Transparency Score (Higher=Better)

 Source: JLL, LaSalle Investment Management

Continued progress in regulatory environments is also critical to raising transparency levels. While there
have been a number of positive regulatory steps taken over the past two years across the region, some
markets have introduced legislation which raises questions about transparency levels going forward, such
as South Africa’s proposed constitutional amendment on land expropriation.
14

Johannesburg
The Path to Real Estate Transparency across Sub-Saharan Africa 2018

The future shape of real estate transparency

Sub-Saharan Africa continues to make progress in real estate transparency, although the pace of
improvement will need to accelerate to close the gap with other regions and meet rising expectations.
Transparency is an integral component of building more functional real estate markets for the region’s
future needs, from being able to accurately determine community and business requirements for urban
planning and design, to sourcing sustainable financing and improving the investment climate.

Looking ahead, deeper engagement from international service providers, a widening pool of funding
sources and, crucially, improved regulatory enforcement will all be required to meet the growing demand
for transparency across the region.

                               Future Drivers of Real Estate Transparency

            The Rise of                                                               Regulatory
              Proptech                                                                Enforcement

                                           Transparency
                                           Improvement

             Deepening                                                                Sustainable
              Liquidity                                                               Practices
16

Proptech provides opportunity to leapfrog normal transparency evolution
New technologies – such as blockchain for land registries or transactions; ‘smart’ buildings and
infrastructure for facilities management or repair; and new database capabilities for collaborative data
sharing between market participants – together with digitisation of existing processes, offer the potential to
leapfrog traditional methods of improving market information where regular data sources may be lacking.
A number of Sub-Saharan African countries are introducing new ways to provide better services or improve
data availability, with examples including:

•      Digitisation – Governments across the region are taking steps to digitise data collection and
       publication as well as to create online e-governance portals in an effort to improve efficiency and
       visibility. In addition to improvements to land registries, this includes online services such as
       facilitating land transfers or tax payments (in Kenya and Rwanda) or the collation and publication of
       government data and regulations (e.g., land transfer statistics in Lagos).

•      Blockchain – Several governments, including Kenya, Ghana and Rwanda, have set up working groups
       or already trialled blockchain technologies for recording land ownership, while private companies are
       also looking to set up commercial systems in several markets.

•      Listings – The most widely adopted technology platforms within real estate globally are oriented
       around listings websites, and these are proliferating across Sub-Saharan Africa, from multinational
       sites such as Jumia to country-specific platforms like PropertyPro in Nigeria or Property24 in Kenya.

•      Data collection – Technology is aiding the collection of more comprehensive and accurate market
       data. HassConsult in Kenya, for example, compiles data from listing websites as well as offline sources
       for its property indices.

    Kigali
The Path to Real Estate Transparency across Sub-Saharan Africa 2018

  Deepening liquidity
  Increased market participation by institutional investors and the development of the listed sector are key
  factors in enhancing publicly available market fundamentals data, increasing visibility of current market
  trends and improving investment performance tracking. Institutional capital currently plays a limited role in
  most Sub-Saharan African markets, with low allocations from local pension funds and relatively few public
  companies focused on long-term ownership of real estate.

  The ongoing spread of REIT legislation – with Uganda joining South Africa, Kenya, Nigeria and Tanzania
  in passing legislation enabling such structures in 2017, while Ghana is also expected to table regulations
  to facilitate REIT formation in 2018 – is a positive sign for the region. However, take-up has been slow in
  those markets which allow REIT structures, with opacity around tax structures, lack of institutional capital
  allocated to local REITs and investor unfamiliarity hampering the development of the sector.

             Higher transparency encourages higher investment
             Real Estate Transparency and Investment Volumes

                                  11
Transaction Volumes (Log Scale)

                                              South Africa

                                  10

                                   9
                                                                           Mauritius
                                                                                              Nigeria
                                                                                  Zambia
                                                                   Kenya                                                    Mozambique
                                                                                                        Ghana          Tanzania
                                   8
                                                                   Botswana                                                Ethiopia
                                                                                               Rwanda                            Senegal

                                   7                                                                            Angola
                                                                                                     Uganda                    Ivory Coast

                                                                                                                                      R² = 0.54
                                   6
                                    2.0              2.5     3.0              3.5                    4.0                 4.5                5.0
                                    Transparent                        Transparency Score                                               Opaque

  Total real estate investment volumes, 2007-2017, log scale
  Source: JLL, LaSalle Investment Management, RCA
18

Regulatory enforcement
In common with the majority of other ‘Semi-Transparent’ and ‘Low Transparency’ markets globally, those
in Sub-Saharan Africa exhibit a significant divergence between regulation and enforcement capabilities.
Further advancements in the ability to put new and existing regulations into practice – particularly in
building safety standards, land use planning and financial regulations – will be required in order for many of
these markets to meaningfully raise their transparency levels.

Regulatory enforcement lags transparent markets

Transparent 1.0
         Average Regulatory Enforcement Score (Inversed)

                                                           2.0

                                                           3.0

                                                           4.0

                                                                 Sub-Saharan Africa
                                                                 Transparent Market Average
     Opaque 5.0
                                                                 Compulsory    Taxation       Contracts   Anti-Money   Land Use    Financial    Building    Land      Beneficial
                                                                  Purchase                                Laundering   Planning   Regulations    Codes     Registry   Ownership

Source: JLL, LaSalle Investment Management
The Path to Real Estate Transparency across Sub-Saharan Africa 2018

Sustainability practices
Real estate sustainability transparency remains at an early stage across the region, with every market
apart from South Africa scoring in the ‘Opaque’ category on this measure. While councils for the Green
Star South Africa building certification system have now been established in seven countries, there has
been limited progress in most markets on issues such as energy efficiency standards or benchmarking
systems, ‘green’ leases or carbon reporting frameworks. With significant structural demand for modern
infrastructure, housing and commercial real estate across the region, progress on these measures will
be needed to ensure high-quality new construction and urban environments that are able to meet the
sustainability requirements of the future.

Sub-Saharan Africa – Sustainability Transparency, 2018

                           Green Building Certification

                     Energy Efficiency (New Buildings)

                                               Average
Higher Adoption

                                Financial Performance

                  Energy Efficiency (Existing Buildings)

                                  Green Lease Clauses

                                     Carbon Reporting

                                Energy Benchmarking

                                                           5.0               Transparency Score (Inversed)                4.0
20

Improving valuation standards boost
transparency across Sub-Saharan Africa

                                   by Joshua Askew, FRICS and
                		                 Shadrack Mella

With the exception of South Africa, national valuation standards harmonised with global standards have
been absent in Sub-Saharan Africa to date. Apart from Royal Institution of Chartered Surveyors (RICS)
standards, which are used by global real estate professional services firms working in Africa, this absence
of enforced national standards has compromised transparency and resulted in severe reliability issues with
respect to local valuations produced across the continent. All of this is beginning to change.

International valuation standards are codified by the International Valuation Standards Council (IVSC),
which released its latest International Valuation Standards in January 2017. The IVSC is an independent,
not-for-profit organisation that acts as the global standard precedent for valuation practice, and standards
setters, local valuation bodies and surveying institutions across the globe unify their own standards with
those of the IVSC. This is also now becoming the case in Sub-Saharan Africa.

With respect to serving as an example of the benefits of global valuation standards, the RICS and its
members have been active in Sub-Saharan Africa for several decades, and have been the standard bearer
in the region. The RICS Valuation Standards – known as the ‘Red Book’ – include the IVSC Standards and
have served as a practical example in both East and West Africa, demonstrating the substantial benefits
of possessing a coherent valuation framework emphasising harmonisation, professionalism and ethics in
territories which have historically lacked transparency and regulation.

Recent developments in valuation standards in two of Sub-Saharan Africa’s core markets, Kenya and
Nigeria, are encouraging and demonstrate how SSA’s valuation landscape is changing for the better.

Kenya
The valuation profession in Kenya is regulated by two bodies – the Institution of Surveyors of Kenya (ISK)
and the Valuers Registration Board (VRB). The ISK is the professional organisation that brings together the
different property professionals that that include valuers and land and building surveyors. The VRB on the
other hand is a statutory body established under an act of parliament and is tasked with valuers licensed
to undertake professional valuations.

Although the existence of these bodies over the years has led to better regulation of valuation practice and
reports produced in the market, the absence of clear and enforceable standards has resulted in a lack of
transparency and consistency. To address this, the Institution of Surveyors of Kenya has developed the
ISK Valuation Standards 2018, also referred to as the ‘Blue Book’, which incorporate the IVSC International
Valuation Standards. The principal objective of the ISK Standards is to ‘provide appropriate direction
and guidance to ISK members to ensure that the valuation advice and reports issued achieve the highest
standards of professionalism, integrity, clarity, reliability, and impartiality, and that the valuations/reports
are prepared in accordance with the recognised bases that are appropriate for the purposes of their
preparations’.
The Path to Real Estate Transparency across Sub-Saharan Africa 2018

The four key objectives the standards aim to achieve are:

•    To safeguard the public interest of the people of Kenya;

•    To demonstrate that valuations undertaken in Kenya are transparent and produced under a strict
     code of ethics;

•    To demonstrate that the valuations undertaken in Kenya meet the requirements of international
     investors and other international organisations;

•    To allow assets in Kenya to be benchmarked accurately in a global marketplace.

The Valuers Act that established the Valuers Registration Board is also set to undergo amendment in order
to empower the Board to better regulate valuers and enforce standards. The ISK is currently collecting
views from its members and relevant stakeholders that include financial sector regulators, banks, pension
funds and universities, with the standards expected to be concluded and come into effect in 2019.

Nigeria
The structure of the valuation profession in Nigeria is similar to that of Kenya. The professional
organisation that caters for the interests of professional surveyors in the country is known as the Nigerian
Institution of Estate Surveyors and Valuers (NIESV). The Estate Surveyors and Valuers Registration Board of
Nigeria (ESVARBON), established by the Estate Surveyors and Valuers Decree, is the regulatory body for the
valuation profession.

In 2017, the ESVARBON embarked on the development of the Nigerian Valuation Standards, also known
as the ‘Green Book’. The main objective of the standards is ‘to engender confidence in, and to provide
assurance to clients and recognised users alike, that a valuation provided by an ESVARBON registered
valuer anywhere in the Federal Republic of Nigeria will be undertaken to the highest professional
standards’. The Green Book will also incorporate the IVSC International Valuation Standards and
will require its members to adopt these standards.

The Green Book will set out procedural rules and guidance for valuers and covers ethics and conduct
as well as establishing a framework for uniformity and best practice in the execution and delivery of
valuations. The NIESV has been scheduling forums since late 2017 where it has gathered input from
professional members as well as various stakeholders, and it is expected that the Green Book will be
published and adopted during the course of 2018.
22

Global Real Estate Transparency Index, 2018
 Transparency       Global                               Transparency   Global
     Tier           Rank        Market           Score       Tier       Rank     Market               Score
                      1         United Kingdom   1.24                     51     Mauritius            3.23
                      2         Australia        1.32                     52     Chile                3.23
                      3         United States    1.37                     53     Kenya                3.29
                      4         France           1.44                     54     Saudi Arabia         3.32
                      5         Canada           1.45                     55     UAE - Abu Dhabi      3.37
                                                             Semi
        High          6         Netherlands      1.51                     56     Zambia               3.41
                      7         New Zealand      1.59                     57     Egypt                3.45
                      8         Germany          1.88                     58     Peru                 3.47
                      9         Ireland          1.93                     59     Argentina            3.47
                      10        Sweden           1.93                     60     Macau                3.49
                      11        Finland          1.95                     61     Vietnam              3.52
                      12        Singapore        1.97                     62     Bahrain              3.55
                      13        Hong Kong        1.97                     63     Morocco              3.56
                      14        Japan            1.98                     64     Colombia             3.56
                      15        Switzerland      2.02                     65     Costa Rica           3.58
                      16        Belgium          2.08                     66     Sri Lanka            3.70
                      17        Denmark          2.11                     67     Nigeria              3.73
                      18        Italy            2.12                     68     Jordan               3.74
                      19        Spain            2.14                     69     Ukraine              3.82
                      20        Poland           2.15                     70     Kuwait               3.84
                                                             Low
                      21        South Africa     2.21                     71     Qatar                3.90
     Transparent      22        Austria          2.23                     72     Uruguay              3.96
                      23        Czech Republic   2.26                     73     Myanmar              3.96
                      24        Norway           2.30                     74     Iran                 3.97
                      25        Portugal         2.30                     75     Pakistan             3.99
                      26        Taiwan           2.32                     76     Ghana                3.99
                      27        Slovakia         2.40                     77     Kazakhstan           4.03
                      28        Hungary          2.44                     78     Rwanda               4.06
                      29        Romania          2.49                     79     Ecuador              4.10
                      30        Malaysia         2.57                     80     Panama               4.15
                      31        South Korea      2.60                     81     Lebanon              4.18
                      32        Luxembourg       2.65                     82     Oman                 4.19
                      33        China            2.67                     83     Tunisia              4.20
                      34        Thailand         2.69                     84     Uganda               4.20
                      35        India            2.71                     85     Angola               4.25
                      36        Israel           2.72                     86     Cayman Islands       4.26
                      37        Brazil           2.75                     87     Algeria              4.27
                      38        Russia           2.78                     88     Belarus              4.32
                      39        Mexico           2.78                     89     Bahamas              4.36
                      40        UAE - Dubai      2.79                     90     Tanzania             4.37
                                                           Opaque
                      41        Turkey           2.82                     91     Guatemala            4.40
        Semi
                      42        Indonesia        2.87                     92     Ethiopia             4.47
                      43        Greece           2.94                     93     Dominican Republic   4.48
                      44        Croatia          3.01                     94     Honduras             4.50
                      45        Botswana         3.06                     95     Iraq                 4.51
                      46        Slovenia         3.06                     96     Ivory Coast          4.53
                      47        Serbia           3.11                     97     Mozambique           4.53
                      48        Philippines      3.11                     98     Senegal              4.59
                      49        Bulgaria         3.11                     99     Libya                4.63
                      50        Puerto Rico      3.18                    100     Venezuela            4.73

Source: JLL, LaSalle Investment Management
The Path to Real Estate Transparency across Sub-Saharan Africa 2018

                                                            Johannesburg
24

JLL Regional Headquarters

Chicago                                                                  London                                                          Singapore
200 East Randolph Drive                                                  30 Warwick Street                                               9 Raffles Place
Chicago, IL 60601                                                        London W1B 5NH                                                  #39-00 Republic Plaza
USA                                                                      United Kingdom                                                  Singapore 048619
+1 312 782 5800                                                          +44 20 7493 4933                                                +65 6220 3888

JLL Sub-Saharan African Offices

Johannesburg                                                             Lagos                                                           Nairobi
Office 303, The Firs                                                     1st Floor, Level 5                                              Delta Tower
Crn Biermann & Cradock Ave                                               East Tower, Wings Office Complex                                Chiromo Road
Rosebank                                                                 17A Ozumba Mbadiwe Road                                         Nairobi
South Africa                                                             Victoria Island, Lagos                                          Kenya
+27 11 507 2200                                                          Nigeria                                                         +254 7301 12024
                                                                         +234 1 7001340

To find out how JLL can assist you in making real estate decisions in Sub-Saharan Africa

Thierry Delvaux                                 Craig Hean                                 Tom Mundy                                     Joshua Askew
CEO: MEA                                        CEO: South Africa and                      Head of Advisory                              Head of Valuation
+971 4 426 6999                                 Sub-Saharan Africa                         Sub-Saharan Africa                            Sub-Saharan Africa
thierry.delvaux@eu.jll.com                      +27 11 507 2200                            +27 11 507 2200                               +44 20 7399 5466
                                                craig.hean@eu.jll.com                      thomas.mundy@eu.jll.com                       joshua.askew@eu.jll.com

Contributing Authors
Jeremy Kelly, Matthew McAuley, Thomas Mundy, Joshua Askew, Shadrack Mella.

To find out more about Global Real Estate Transparency, visit our website:
www.jll.com/transparency

COPYRIGHT © JONES LANG LASALLE IP, INC. 2018
This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics discussed, which are inherently
unpredictable. It has been based on sources we believe to be reliable, but we have not independently verified those sources and we do not guarantee that the information in
the report is accurate or complete. Any views expressed in the report reflect our judgment at this date and are subject to change without notice. Statements that are forward-
looking involve known and unknown risks and uncertainties that may cause future realities to be materially different from those implied by such forward-looking statements.
Advice we give to clients in particular situations may differ from the views expressed in this report. No investment or other business decisions should be made based solely
on the views expressed in this report
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