Twelve Years of Supporting Post-Crisis Recovery
“The system of private property is the most important guaranty of freedom, not only for those who own property, but scarcely less for those who do not. It is only because the control of the means of production is divided among many people acting independently that nobody has complete power over us, that we as individuals can decide what to do with ourselves.” Friedrich A. Hayek
“What a long strange trip its been.” Jerry Garcia
In times of crisis, the stress on institutions reveals long standing weaknesses. In 1998 the “Asian Flu” devastated financial and property markets in Southeast Asia. This time starting in Thailand, a financial contagion spread quickly in countries that lacked transparency and appropriately regulated property markets. Asset bubbles burst and there was a global correction. In studying the crisis, the World Bank noted slow recovery in countries where these was a lack of competency in the financial services sector.
In 2002 the Appraisal Institute, the Center for International Private Enterprise (CIPE), Fannie Mae, and IHC Global convened a forum to discuss the importance of international real property market development for equitable economic growth and global security especially for post-crisis recovery. This forum lead to a presentation by these organization at the U.S. Chamber of Commerce in 2003 on lesson learned from their work over the years in training property professionals in developing and emerging markets
Then in 2008 the “Lehman Shock” spread the poor regulation and oversight of derivatives based on residential mortgages in the U.S. around the world and led to a global recession and credit crunch. In response CIPE and IHC Global got together with World Citizen Consulting to create a property markets system analysis tool – the International Property Markets Scorecard.
The Scorecard aimed to demonstrate how capital moves through the core elements of a property market system and help countries identify areas for reform. If the system is properly regulated, with rational and rapid dispute resolution and transparent and valid market data, it can create additional capital and lead to broad economic growth. Weaknesses in any element of the system, whether weak property rights, limited access to credit or excessive corruption gums up the system and limits people’s ability to start businesses, move up the income ladder and for system recovery from inevitable downturns.
The Scorecard consists of both desktop and field research and can be adapted to support a nuanced understanding of market conditions. It can inform appropriate policy changes and help all parties with data informed decision making. The Scorecard can be used by investors as a proxy where there is a lack of trusted sales data. Recent Scorecards have been completed in Benin, Ghana, Nigeria and Uganda. Work is underway in Georgia, Kenya, Moldova and Romania.
Late last year we got together to plan for a relaunch of the International Property Markets Scorecard for March 2020. We were remarkably prescient of today’s crisis as the tool can once again can be used to understand how an unbalanced system – one overly focused on luxury condo towers or one that leaves out minorities, the homeless or migrant workers – makes recovery from any shock slower and the pain felt by the public more broad and more acute.
Over the years the Scorecard has proven to be a flexible and practical tool that can be used by educators, policy makers, investors and reformers to understand the interconnections of a property market system. It has been used to focus on conditions for small-to-medium enterprises as well as for focusing on women’s access to property rights and markets. We have seen marked improvement in countries such as Rwanda where there was political will to reform the system and Armenia where small businesses were given a seat at the table with policy makers.
As we face this current crisis and the long recovery, the fundamentals won’t change. Everyone deserves affordable housing and access to credit. Governments have a responsibility to understand and regulate the property market system without excessive corruption and cronyism. Property market professionals have to do more to share data and assist with the mediation of disputes and work outs of troubled assets. While the current pandemonium is stressful, CIPE, IHC Global and World Citizen Consulting have been partnering for almost twenty years to make sure we are ready to emerge in a more inclusive and resilient world.
William Endsley is an IHC Global Consultant and the Principal Consultant for World Citizen Consulting. He has over twenty years experience in developing international market strategy and has traveled throughout the America’s, Asia, Europe, and Africa working to develop professionals in the finance and real estate sector as a means for broader economic development and global security. He is currently working with IHC Global and the Center for International Private Enterprise (CIPE) on the International Property Markets Scorecard Methodology. He is an Adjunct Professor at Georgetown University and has guest lectured at Johns Hopkins and George Washington University. He previously served as the Director of International Relations for the Appraisal Institute where he directed the organization’s entry into China, Germany, Korea and Turkey.