- Developed markets
- Developing markets
Property markets in the Commonwealth
Property markets in the Commonwealth are very diverse and amorphous with many differences between the developed part of the Commonwealth and the developing. Common law is perhaps the only uniting factor of property markets in the association. Common law forms the basis of legal systems in most of the Commonwealth. It provides for specific norms with respect to ownership of property and tenancy. However, successive statutes have altered property ownership and rights in various ways in many countries and customary laws take precedence over common law in some instances. Tenancy laws, for example, have been altered to protect tenants’ rights in a number of countries. Ownership of land in many areas is restricted to government, locals or certain ethnic groups.
Developed and emerging markets
Developed and emerging economies of the Commonwealth will often have a highly organised property sales and lettings market with many estate agents and firms, some operating as single-ownership networks, some as franchises, and others sole entities. General ‘plus’ points of the markets include strong economies, stable socio-political environments, low to moderate transaction costs and mature mortgage markets. The extent of sophistication can be very high in some countries where the property market can give rise to financial derivative securities based on property prices and rental income which can be traded fluidly in the financial markets. The UK operates such a system through the Investment Property Databank (IPD).
Major weaknesses of property markets in more developed member states are that they are often very expensive with property prices prohibitive especially for first time buyers, and highly vulnerable to the vagaries of the national economy. Poorly performing property markets can also force an economy into recession.
Property in developing countries is often relatively much cheaper and inexpensive to run for an outsider from a richer country’s point of view. Some developing countries, particularly in the Caribbean Commonwealth have been successful in attracting foreign investment in the property markets. The property market in such countries is very open. For example, in Jamaica there are no restrictions on foreign ownership of property and the whole process of registering a property takes a relatively short time to complete.
Property markets in many developing countries, such as in Africa and the South Pacific, are primarily limited to urban and commercial land. A key issue in this phenomenon is property rights. Property rights in the rural areas (as opposed to urban and commercial) of many developing countries are informal. Some property experts argue that the lack of formalised titles – written and publicly recorded title deeds guaranteed by law – on rural property makes it difficult for people to market it and is also a disincentive for a person to develop it because of the threat of expropriation. Rural communal ownership, which is in any case informal, also supposedly makes it difficult to determine ultimate rights of ownership. The lack of documentation which determines absolute property rights also makes it impossible to access investment and mortgaging or loan facilities from conventional banks.
When it comes to the marketing of urban and commercial real estate in underdeveloped markets bureaucracy is a key problem where, for instance, no single institution is responsible for transacting ownership and the formalisation of ownership is left to a byzantine assortment of government agencies. Paperwork can take months to years, making transfer of ownership difficult and expensive.