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According to the Global Real Estate Transparency Index (GRETI) report prepared by JLL, Spain is one of the ten most transparent countries in Europe and 18th in the world.
Corporate governance of listed real estate companies and transparency in the asset purchase and sale process are the areas in which Spain scores best.
Among the regulatory developments, the report highlights the creation of the Central Register of Real Estate Titles (RCTIR).
1. Global Real Estate Transparency Index
The Global Real Estate Transparency Index (GRETI) 2024, prepared by JLL and La Salle on a biannual basis, ranks Spain as one of the ten most transparent real state markets in Europe. Globally, Spain remains in eighteenth place as the country with the most transparent real estate market: the same position it occupied in the previous edition of the GRETI 2022 ranking.
- Spain therefore falls into the category of ‘transparent’ markets, the second step in the ranking behind only the ‘highly transparent’ countries. The remaining categories in the report are: ‘semi-transparent’, ‘less transparent’ and, finally, ‘opaque’ markets.
- The factors underpinning Spain’s position as one of the 20 most transparent markets in the world are, firstly, transparency in asset sale and purchase processes and the corporate governance of listed real estate companies. In both aspects, Spain improves its ranking with respect to the GRETI 2022 index: in terms of transparency in sales and purchases, Spain moves from ninth place in 2022 to eighth place in 2024; in terms of corporate governance, the national market gains two positions and is in sixteenth place compared to eighteenth place in the last report. Another aspect that the report also highlights is the clarity of Spain’s performance indices (19th place in this subcategory).
2. Central Register of Real Property Ownership (RCTIR)
The report also highlights among the main regulatory advances in the field of transparency in Spain, the creation of the Central Register of Beneficial Ownership (RCTIR) which aims to collect and publicise information on beneficial ownership in force for all Spanish legal persons and trusts and similar unincorporated entities or structures operating in Spain.
- AI and sustainability pose new opportunities and transparency challenges
- The proliferation of AI has been rapid, accelerating expectations of its impact on the real estate sector with the influence of tools such as JLL’s AI platform, JLL GPT. It is estimated that more than 500 companies now offer AI services specifically for the real estate sector, and with a significant increase in investment, early findings suggest that AI will drive transparency across the sector with its ability to review and summarise large volumes of data and analytics, automate building management and empower urban and architectural design.
- However, experts and regulators have raised the risks of AI and introduced policies such as the US Executive Order on AI and the recently passed European Union (EU) AI Act to ensure responsible deployment of the technology to maintain transparency.
3. LAUNDERING AND BENEFICIAL OWNERSHIP
Debt markets, money laundering and beneficial ownership are key issues.
- Approximately $3.1 trillion of global real estate assets are exposed to debt maturities between 2024 and 2025, of which $2.1 trillion of debt will require refinancing. Approximately 30% has been completed in the first half of 2024; however, monetary authorities have expressed concerns about the potential risks arising from the relative lack of transparency as the number of non-bank credit providers expand and complement traditional sources of credit.
- While commercial real estate lending was historically dominated by regulated banks, the ecosystem of finance providers has expanded with the emergence of new sources of credit, such as debt funds, pension funds and insurance companies. This diversification has created a more balanced market, but also less visibility of financing conditions in many countries, raising new transparency issues.
- Alongside debt markets, money laundering and beneficial ownership regulations have emerged as areas of transparency to watch. New Financial Action Task Force (FATF) guidelines requiring countries to ensure that they can trace the true ownership of companies, together with the expansion of financial sanctions regimes, have maintained the momentum to improve anti-money laundering and beneficial ownership regulations.
Despite global action, the effectiveness of these regulations remains under scrutiny, as implementation and definitions are often inconsistent and easy to circumvent. Countries such as India, Indonesia, the United Arab Emirates and the US have introduced changes to anti-money laundering and beneficial ownership regulations to aid transparency, and further regulations are in the pipeline in the US, Singapore, Switzerland, Canada, Australia and the EU.
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