Catching the emerging markets’ fire: how CRE can help technology companies to striveFebruary 25, 2014 / By
More and more companies are shifting their growth to emerging markets, and technology multinationals are showing the way. According to Jones Lang LaSalle’s Global Corporate Real Estate (CRE) Survey, technology companies are the most aggressive in expanding their footprint in emerging markets, with key growth destinations being BRIC countries, Central and Eastern Europe and Southeast Asia (Fig. 1).
Figure 1: Top 10 countries /regions by net portfolio growth
Question: Over the next three years, how will your portfolio evolve in each of the following regions?
There are many reasons why emerging economies are so attractive for technology companies: a burgeoning consumer base with growing demand for high-tech products, developing talent pools, low operating costs and government incentives, among others. However, many companies underestimate the challenges and risks of operating in these markets. According to a Global Intelligence Alliance survey (Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey), 92% of TMT companies admit that they would have done something differently in how they planned and executed their emerging markets strategy.
To succeed in their emerging markets endeavours, technology companies need to act fast to capture the first-mover advantage and to be flexible to adapt to local nuances and changing market conditions. The CRE departments of technology firms play a decisive role in ensuring these prerequisites and keeping the operations fuelled up.
As a matter of fact, technology CRE executives will be spending more of their time on emerging markets, building the platform for growth that can accommodate rapid shifts in business priorities. CRE teams will focus on increasing the utilisation and productivity of their portfolios, as well as creating on-demand spaces and enabling remote and mobile working – in response to leadership demands for flexibility and productivity.
However, building flexible real estate portfolios can be a challenging task in less regulated and non-transparent markets. Technology firms are already relying on CRE service providers to leverage their local knowledge and expertise and hit the ground running in emerging markets. This strategic partnership will strengthen even further in the next three years—over a third of surveyed technology firms will be fully outsourcing some of their key CRE services, such as lease administration, portfolio and facilities management, property management and transactions services.
Supporting the business changes by suitable and flexible real estate portfolios will ensure the continuity of operations and keep the bottom line healthy, making an important contribution to the business growth technology companies are seeking in emerging markets.
To learn more about CRE trends in technology sector, read our Leading the Charge in Emerging Markets report.