|Central/Eastern Europe Data Analysis Development Project Completed|
Under a grant from the Reaume Foundation, IRPF recently completed a data analysis program in Central/Eastern Europe. The goal of the program was to develop a clear understanding of data availability, ownership, and collection capacity in order to set up systems to collect and utilize timely and accurate information on the real estate market. This information would then ideally be used to project property sales and pricing activity.
With IRPF consultant Kathryn Owens’ hard work, valuable information regarding the readiness and potential for Data Aggregation systems in Ukraine, Poland, and Georgia was collected. After traveling to the three countries this summer and conducting meetings with individuals and companies who have access to property data information and knowledge of the data available, Owens’ concluded “The three countries are in three very different places [in terms of MLS development]. It was a good sampling of all the possible issues.”
Her report paints a clear picture of the effects the history of the Eastern/Central European region has on the current state of the market and provided insightful recommendations on how each region should move forward in their efforts to track property prices and create a transparent market.
Owens discovered that over the last decade Eastern Europe and the Caucuses have experienced rapid increases in the availability and use of mortgage financing. This combined with a policy vacuum on housing standards and limited urban planning stalled information collection efforts in the residential sector. A snapshot from her report on how the history of the region contributed to difficulty faced in collecting accurate data follows:
One of the major impediments to accurate reporting is some combination of property taxes and fees, which leads to misreporting of actual sales prices. As a result, real estate brokers are often the only actors who possess information on actual sales prices as a result of the incentive to misreport sales information. The problem is compounded by a complicated and inconsistent registration process, which requires multiple agencies and a myriad of steps. As a result, efforts should continue to streamline and simplify the property transfer process in order to encourage reporting.
To summarize her findings, in Poland there has been significant progress in creating the framework for MLS which will lead to a sales price database. Owens suggests that other markets could benefit from the Polish experience and therefore a best practice analysis would be helpful. While there exists the local capacity to implement a program, there is not a strong interest since there is no clear local leader to organize the effort. Owens’ recommendations for Poland include to develop a case study for other markets based on the Polish experience with developing an MLS and to explore the possibility of conducting a workshop between US and Polish practitioners to share market analysis techniques.
In Ukraine significant progress has been made to begin collecting sales data and building trust among real estate actors although hurdles remain to collect accurate data including the presence of political divisions and internal fighting. Owens saw a great potential for an MLS project in the market, stating in a recent interview “In Ukraine, IRPF has a significant team on the ground and they have the most organized interest in this type of project.” Her recommendations for the Ukrainian real estate industry include revising an existing business plan for data collection, networking with Russia and Polish counterparts to learn about their experiences implementing data collection framework, and develop a market analysis training module which demonstrates the importance of market information and could be used to continue to convince practitioners of the need to share data.
In Georgia, Owens found that the government appears to provide excellent data but accurate price data remains an issue. An existing collection process by the Association for the Protection of Landowners Rights (APLR) is admirable but does not seem to add usable data. Owens states that “similar to Ukraine, the reality of creating an operational MLS seems limited yet a framework could set the stage for the future use of exclusive contracts.” The country recognizes that data sharing is integral to improving the market but as in Poland, with no clear leader the local capacity is limited. Nonetheless, if the hurdles can be overcome, in-depth and timely market analysis appears very feasible. Owens recommends the Georgians to develop a lessons learned module based on the specific experience of rapidly transitioning to a digitally based land registry, advocate the Georgian Real Estate Association (GREA) to put together a business plan for implementing a data collection effort, and to continue investigating potential Georgian academic counterparts who could assist the GREA in its efforts to collect and analyze data.
A visual summary of Owens conclusions for each country visited follows:
|Type of Project||Market Analysis Video Conference and Best Practice Assessment||Sales Price Database||Sales Price Database|
In revisiting her findings in an interview with IRPF, Owens’ reiterated what she believes to be the fundamental elements needed to get an MLS going in each of the countries by stating, “You need a local champion and you need a pot of cash.” With the results from Owens’ trips IRPF hopes to harness more funding to further the data collection program by assisting in the implementation of some of the recommended steps to be taken. The program report is a great beginning to what IRPF hopes to be ongoing and developing program badly needed in emerging markets.
Kathryn Owens is a former PhD student of Richard Green - past IRPF Board Member and IRPF Consultant - who is Director of the USC Lusk Center for Real Estate. She is currently pursuing a PhD in Urban Planning and Economics from the University of Michigan.
The Leonard P. Reaume Memorial Foundation was established in 1996 by Mrs. Renee Reaume to honor her late husband Leonard and, in particular, his commitment and contributions to the field of international real estate.The Foundation strives to be a leading philanthropic advocate for ethics, education and efficiency in real estate markets globally. IRPF is grateful for the Reaume Foundation’s contributions which made this program possible.