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News Release

Hong Kong and Macau

Jones Lang LaSalle releases its inaugural China Corporate Real Estate Survey (2012)

The global and domestic expansion strategies of Chinese corporations are increasingly shaping real estate planning


HONG KONG & MACAU, July 10, 2012 –  Jones Lang LaSalle’s inaugural China Corporate Real Estate Survey (2012)  reveals that China’s sustained economic growth, and the on-going internationalization of Chinese corporations, have resulted in the key Corporate Real Estate (CRE) drivers closely mirroring global trends.

The report, ‘The Dragon is Stirring’ provides unparalleled insights into how CRE leaders in China are shaping their strategies and positioning for the future. It also addresses the factors influencing the pace of change in CRE service delivery, as Chinese companies re-evaluate their approach to outsourcing non-core business functions.

Julien Zhang, managing director for Jones Lang LaSalle Beijing said: “CRE is starting to gain momentum in China, and 2012 is shaping up to be a very interesting year.  Domestic and overseas expansion plans are powerful drivers shaping CRE strategies amongst Chinese corporations. As the business considerations of Chinese companies become more similar to those of their Western counterparts, we expect their work styles, organization and outsourcing to move closer to the global trends observed in more mature countries over the next three years.”

The report highlights three key themes: 

  1. Fast Growth, Costs Under Check
    • Cost pressures (53% today, and 47% three years from now) and organic growth (50% today, and 44% three years from now) are the central drivers shaping CRE strategies.
    • Upgrading brand image is also considered important, as Chinese companies move into Grade A office space in Tier I cities to achieve a better corporate profile. A large majority of Chinese companies anticipate their portfolios to expand over the next three years, as CRE teams focus on domestic expansion (93%), driven by Tier II and Tier III cities (respectively 87% and 84%), plus Hong Kong, Macau and Taiwan. 
    • Over the next three years, cost pressures, organic growth and brand image will remain the top priorities, but they will lose intensity. Competition will attain fourth position, and merger and acquisition (M&A) activity, corporate social and environmental responsibility and the ‘war for talent’ will also gain traction.
  2. Maturing Service Delivery
    • The transition from fully in-house to partially outsourced CRE service delivery is expected as Chinese companies reassess the value of outsourcing to their business. Only 20% of respondents (from 53% today) will fully deliver CRE services in-house in three years’ time.
    • A clear shift is noticeable toward a more centralized CRE management model, from 50% today to 65% three years from now.
    • Chinese companies are looking for partners that can provide a full suite of services, whether they are local or international companies. While one half of Chinese companies currently have a decentralized CRE management function in each location, 65% will adopt a more centralized model three years from now.
  3. Higher Expectations
    • CRE roles are becoming more strategic. Robust leadership engagement is reflected in the high proportion of Chinese companies that have a CRE strategy in place (56%).
    • One quarter (25%) of surveyed companies now have a dedicated CRE department. 
    • Another sign of confidence is the relatively long-term CRE strategy (3–5 years) that 76% of these companies have, enabling them to plan ahead.

“Chinese companies are clearly readying themselves to weather competitive operating environments, both in China and overseas,” concluded Julien Zhang, managing director, Jones Lang LaSalle Beijing. “Demonstrating greater innovation and being solution-oriented in terms of CRE strategy will be critical. If global trends have any resonance in China, striving for innovation combined with cost objectives will likely merge into a quest for enhanced productivity.”