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UN Economic Commission for Europe 63 rd Session, March 30-April 1 st , 2009 GENEVA Monday March 30 th AFTERNOON SESSIO - PowerPoint PPT Presentation


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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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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


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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


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The Current Crisis

Plenty of Equity……BUT Credit has Dried!


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$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


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UNECE

www.rics.org


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UNECE GENEVA

  • THE THREE MARKET SEGMENTS

  • Real estate markets are important to national economies through…….

    • Housing

    • Infrastructure

    • Investment

www.rics.org


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UNECE GENEVA

INVESTMENT

…. is important to attract inward capital investment.

This is achieved via a LEVEL PLAYING FIELD.

www.rics.org


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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


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UNECE

THE FUNDAMENTAL MARKET PYRAMID

The FMP illustrates those globally-recognized infrastructure elements that attract investment

www.rics.org


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UNECE Workshop

www.rics.org


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COMPETING IN A GLOBAL MARKET

EDUCATED PROFESSIONALS

TRANSPARENCY

THE BASE

www.rics.org




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THE FUNDAMENTAL MARKET PYRAMID

THE BASE + TRANSPARENCY


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THE FUNDAMENTAL MARKET PYRAMID

THE BASE + TRANSPARENCY + PROFESSIONALISM


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THE FUNDAMENTAL MARKET PYRAMID

THE BASE + TRANSPARENCY + PROFESSIONALISM =

A COMPETITIVE MARKET ABLE TO ATTRACT INVESTMENT TO ITS LEVEL PLAYING FIELD


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The 12-Point Base

  • 1. THE RULE OF LAW

  • 2. A FAIR LEGAL AND REGULATORY FRAMEWORK

  • 3. ZERO TOLERANCE FOR CORRUPTION

www.rics.org


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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


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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


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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


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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



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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


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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


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TRANSPARENCY – 2 TYPES

  • Financial transparency via regulation

  • Data transparency via information sharing

www.rics.org


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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


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Transparency – Summary

  • “Berliner Kindl …..oben Schaum und unten Schwindel”

  • “A frothy head with nothing beneath”

www.rics.org



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PYRAMID LEVEL 3 – EDUCATED PROFESSIONALS

Public Administrators

Attorneys

Lawyers

Accountants

Doctors

Architects

Valuers/Appraisers

Real Estate Brokers

www.rics.org


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THE TIP OF THE PYRAMID

COMPETING IN THE GLOBAL MARKET

www.rics.org


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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


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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………….


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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.


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UNECE

Thanks for Listening

swilliams@rcanalytics.com