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UN Economic Commission for Europe 63 rd Session, March 30-April 1 st , 2009 GENEVA

UNECE GENEVA. UN Economic Commission for Europe 63 rd Session, March 30-April 1 st , 2009 GENEVA Monday March 30 th AFTERNOON SESSION 1 Promoting competitive, knowledge-based, innovative economies. www.rics.org. UNECE GENEVA. Reforming Real Estate Markets for Financial Stability BY

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UN Economic Commission for Europe 63 rd Session, March 30-April 1 st , 2009 GENEVA

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  1. UNECE GENEVA UN Economic Commission for Europe 63rd Session, March 30-April 1st, 2009 GENEVA Monday March 30thAFTERNOON SESSION 1 Promoting competitive, knowledge-based, innovative economies www.rics.org

  2. UNECE GENEVA Reforming Real Estate Markets for Financial Stability BY Steve Williams FRICS, MAI. Global Advisor - Real Capital Analytics New York swilliams@rcanalytics.com www.rics.org

  3. The Current Crisis Plenty of Equity……BUT Credit has Dried!

  4. $150 Americas EMEA Asia Pacific $148 $145 $125 $131 $127 $112 $100 $100 $87 $84 $83 $75 $66 $64 $50 $56 $55 $54 $52 $41 $40 $40 $25 $0 The Result? Declining global real estate investment Quarterly Sales Volume in billions USD 2007 2008 Q1 '07 Q2 Q3 Q4 Q1 '08 Q2

  5. UNECE www.rics.org

  6. UNECE GENEVA • THE THREE MARKET SEGMENTS • Real estate markets are important to national economies through……. • Housing • Infrastructure • Investment www.rics.org

  7. UNECE GENEVA INVESTMENT …. is important to attract inward capital investment. This is achieved via a LEVEL PLAYING FIELD. www.rics.org

  8. UNECE WHAT CREATES A LEVEL PLAYING FIELD? A DILIGENT AND ENLIGHTENED PUBLIC ADMINISTRATION THAT CAN GUARANTEE REAL ESTATE INVESTORS A FAIR AND OPEN TRADING PLATFORM Hernandez De Soto In his book “The Mystery of Capital”, De Soto addresses the uneven concentration of the world’s wealth. He believes that a fair and open real estate market is the key to attracting capital. www.rics.org

  9. UNECE THE FUNDAMENTAL MARKET PYRAMID The FMP illustrates those globally-recognized infrastructure elements that attract investment www.rics.org

  10. UNECE Workshop www.rics.org

  11. COMPETING IN A GLOBAL MARKET EDUCATED PROFESSIONALS TRANSPARENCY THE BASE www.rics.org

  12. THE FUNDAMENTAL MARKET PYRAMID

  13. THE FUNDAMENTAL MARKET PYRAMID THE BASE

  14. THE FUNDAMENTAL MARKET PYRAMID THE BASE + TRANSPARENCY

  15. THE FUNDAMENTAL MARKET PYRAMID THE BASE + TRANSPARENCY + PROFESSIONALISM

  16. THE FUNDAMENTAL MARKET PYRAMID THE BASE + TRANSPARENCY + PROFESSIONALISM = A COMPETITIVE MARKET ABLE TO ATTRACT INVESTMENT TO ITS LEVEL PLAYING FIELD

  17. The 12-Point Base • 1. THE RULE OF LAW • 2. A FAIR LEGAL AND REGULATORY FRAMEWORK • 3. ZERO TOLERANCE FOR CORRUPTION www.rics.org

  18. The 12-Point Base 4. TITLE Guaranteed ownership rights through a system of recorded property titles 5. FAIR PLANNING CODES A published planning/zoning code with open enforcement and appeal procedures www.rics.org

  19. The 12-Point Base 6. Regulated Financial Reporting For listed (Public) Companies 7. Fair compensation for taking of Property for public purposes 8. Fair system of assessing and collecting Property taxes 9. Fair building codes 10. Fairly enforced health and safety measures 11. Provision of public services either free Or at a fair cost www.rics.org

  20. The 12-Point Base • 12. A TOP-10 MENU OF OPTIONAL ADD-ONS • i. Environmental regulations • ii. REIT legislation • iii. “Fair Housing” laws • iv. Tax Incentive Schemes • v. The Public Interest Agenda • vi. Disaster Management • vii. Consumer Protection • viii. Green legislation • ix. Agriculture Incentives • x. Plans for a world showcase event with a local legacy www.rics.org

  21. Pyramid Level 2 - Transparency Transparency “The movement of capital around the world has created a growing need for information about markets. It has also created an incentive for governments to streamline bureaucratic practices that hinder the free flow of capital” JLL Transparency Index 2008 www.rics.org

  22. PYRAMID LEVEL 2 - TRANSPARENCY www.rics.org

  23. PYRAMID LEVEL 2 - TRANSPARENCY TOP 10 MOST TRANSPRENT COUNTRIES 1. Denmark 2. Sweden 3. NZ 4. Singapore 5. Finland 6. Switzerland 7. Iceland 8. Netherlands 9. Australia 10.Canada 14. GERMANY 15. UK 18. USA Source: Transparency International, Berlin, 180-country survey published September 23rd 2008 www.rics.org

  24. TRANSPARENCY COUNTRIES MAKING MOST PROGRESS TOWARDS TRANSPARENCY 2006 TO 2008: Dubai Romania Ukraine Russia Egypt Saudi Arabia Poland Czech Republic Panama China Vietnam Italy Brazil Portugal Venezuela Source: Jones Lang LaSalle Transparency Index, 2008 www.rics.org

  25. TRANSPARENCY – 2 TYPES • Financial transparency via regulation • Data transparency via information sharing www.rics.org

  26. Transparency – 2 views • Disclosure versus confidentiality? • SHARERS – Interpret and use the data. Do not collect it. • “We use a dedicated go-to data provider rather than run an in-house research department” (USA) • HOARDERS – “The best fish are caught in murky waters” • Much depends on the existing data culture? www.rics.org

  27. Transparency – Summary • “Berliner Kindl …..oben Schaum und unten Schwindel” • “A frothy head with nothing beneath” www.rics.org

  28. PYRAMID LEVEL 3 – EDUCATED PROFESSIONALS www.rics.org

  29. PYRAMID LEVEL 3 – EDUCATED PROFESSIONALS Public Administrators Attorneys Lawyers Accountants Doctors Architects Valuers/Appraisers Real Estate Brokers www.rics.org

  30. THE TIP OF THE PYRAMID COMPETING IN THE GLOBAL MARKET www.rics.org

  31. TODAY’S RELEVANCE OF THE FUNDAMENTAL MARKET PYRAMID Q. WHY IS THIS FUNDAMENTAL MARKET PYRAMID IMPORTANT TO UNECE TODAY? Answers:1. The gap remains between nations WITH the pyramid infrastructure - and those WITHOUT 2. With governments acquiring interests in real estate assets through rescue and stimulus, we are entering a new era of public/private partnerships. www.rics.org

  32. WORKING WITH UNECE Currently working with the Committee on Housing and Land Management, the Working Party on Land Administration and its Real Estate Market Advisory Group (REM). Two events………….

  33. WORKING WITH UNECE NEW YORK - DECEMBER 2008Actively contributed to the UNECE Seminar organized by the UNECE Secretariat and REM on: “The real estate and the financial crisis: causes, effects and impacts on development” ROME - JUNE 3-4, 2009Will contribute to the UNECE/REM meeting to develop policy principles and guidelines for the development of sound real estate markets.

  34. UNECE Thanks for Listening swilliams@rcanalytics.com

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