TRANSPARENCY AND FOREIGN INVESTMENT IN THE PROPERTY MARKETS OF AFRICA: REFLECTIONS ON THE 2012 JONES LANG LASALLE INDEX

Olusegun Adebayo Ogunba

AfRES from African Real Estate Society (AfRES)

Abstract: PURPOSE: The paper examined the nature of Africa’s property markets rating as opaque in Jones Lang LaSalle’s (2002) classification, with a view to enhancing transparency on the Continent and thereby attracting more foreign investment.DESIGN/METHODOLOGY/APPROACH: The paper is a theoretical paper, using paper reviews with reasoned analysis to reach conclusions and articulate the way forward. First, the paper established a link between property market transparency in regions of the world and FDI and demonstrated that opacity is the reason that FDI in Africa is very low (only 1 per cent of global investment). Next, Nigeria was provided as a case study of a Sub-Saharan African country that is rated opaque by the JLL in order to better understand the nature and causes of the continents opacity problems and to serve as a springboard for suggestions on improving transparency on the Continent. Transparency issues in the case study were investigated using the JLL’s (2012) five indicators of transparency.FINDINGS: The study found that Nigeria has tremendous real estate profit potentials (arising from rapid urbanization, the emerging middle class and high GDP levels) which international investors are beginning to notice. There are however opacity barriers confronting such investors in respect of at least four of the five JLL indicators of transparency; the result is that risk-averse international investors like European pension funds shun the country. The study analyzed the potential role of six categories of stakeholders the academia, national/local government, local and international real estate service providers, local and international specialist data vendors, the Securities and Exchange Commision and the professional Institution in addressing deficiencies detected in each of the five indicators and in ultimately increasing the flow of foreign investment.PRACTICAL IMPLICATIONS: The paper provides a much-needed understanding of transparency barriers to foreign direct investment in Africa as well as an articulation of the potential role of six groups of stakeholders in overcoming these barriers.ORIGINALITY/VALUE: The paper has value for all African property market stakeholders who seek enhanced continental property market transparency so that the Continent take its rightful share of global FDI the academia, national/local government, local and international real estate service, local and international specialist data vendors and professional bodies.

Keywords: Africa; foreign investment; Jones Lang Lasalle Index; Nigeria; Property market transparency (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2014-09-01
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