1. 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 UNECE GENEVA www.rics.org

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

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

4. The Result? Declining global real estate investment $0 $25 $50 $75 $100 $125 $150 Q1 '07 Q2Q3Q4Q1 '08 Q2 AmericasEMEAAsia Pacific $148 $145 $131 $127 $52 $41 $100 $112 $84 $64 $54 $87 $40 $56 $66 $83 $55 $40 Quarterly Sales Volume in billions USD 2008 2007

5. UNECE www.rics.org

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

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

8. UNECE www.rics.org 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.

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

10. UNECE Workshop www.rics.org

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

12. THE FUNDAMENTAL MARKET PYRAMID

13. THE BASE

14. THE BASE + TRANSPARENCY THE FUNDAMENTAL MARKET PYRAMID

15. 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 www.rics.org 1. THE RULE OF LAW 2. A FAIR LEGAL AND REGULATORY FRAMEWORK 3. ZERO TOLERANCE FOR CORRUPTION

18. The 12-Point Base www.rics.org 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

19. The 12-Point Base www.rics.org 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

20. The 12-Point Base www.rics.org 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

21. Pyramid Level 2 - Transparency www.rics.org 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

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

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

24. TRANSPARENCY www.rics.org 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

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

26. Transparency – 2 views www.rics.org 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?

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

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

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

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

31. TODAY’S RELEVANCE OF THE FUNDAMENTAL MARKET PYRAMID www.rics.org 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.

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 2008 Actively 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, 2009 Will contribute to the UNECE/REM meeting to develop policy principles and guidelines for the development of sound real estate markets.

34. Thanks for Listening swilliams@rcanalytics.com UNECE