Occupiers’ great ‘wait and see’
September 25, 2012 / By
A record number of participants attended our latest Timing is Everything webinar last week, during which Jones Lang LaSalle’s three regional CEOs shared their views on where the global property market is headed. Overall, a strong sense of medium-term optimism is palpable from companies operating in APAC in spite of expected economic difficulties (Figure 1).
Figure 1 – Which of the two scenarios do you think is more likely to be the outcome in two and ten years’ time in APAC? (Occupiers’ responses only)
Source: Timing is Everything poll question, September 2012
Christian Ulbrich, CEO for EMEA, commented on the increasing dominance of emerging markets on the global scene, with European companies very focused on APAC exports. In sectors such as luxury, the APAC market has already overtaken the US market. As European companies are balancing growth between the regions, the rapid development of interactions between Europe and APAC bodes well for our region where retail space continues to show the strongest demand.
For Peter Roberts, CEO for Americas, APAC is also a big source of opportunity for US companies. He sees them more inclined toward transparent markets, where they are more comfortable; where the market is less transparent, they tend to opt for joint ventures (read here which Asian countries are moving up our Global Transparency Index). India is still in demand from companies looking to reduce costs of production and supply chain but a broader range of locations, such as the Philippines and Malaysia, are also considered. Another trend highlighted by Peter Roberts and confirmed by our poll question (Figure 2) is the significantly greater emphasis placed on sustainability criteria.
Figure 2 – Is your company looking to increase its focus on sustainability/ green initiatives as it relates to your occupation in APAC? (Occupiers’ responses only)
Source: Timing is Everything poll question, September 2012
Real estate growth in APAC is on various trajectories, as described by Alastair Hughes, our CEO for APAC. The region offers a mixed picture with high growth in cities such as Jakarta; slowing growth in China and India; moderate but rising growth in Japan and Thailand; a downturn in Hong Kong and Singapore on the back of weakening financial services demand.
Cautious with their expansion plans, corporations are increasingly reluctant to pay high rents in an office market that tends to favour landlords. As a result, they are adopting a ‘wait and see’ posture. This translates into a quieter office market and moderate leasing volumes compared to last year.
In terms of Corporate Real Estate (CRE) service delivery, there is no sign that the outsourcing trend is about to abate in APAC, a trend driven by two strong factors. Firstly, multinationals are set to use real estate (offices as well as industrial premises) as efficiently as possible, and CRE is now perceived as part of the solution. Secondly, outsourcing is gaining interest from domestic companies in Japan, China, India and Australia, in particular when they are expanding at home and abroad.
