-
30
percent of corporates surveyed show an
increased appetite for expansion in the Middle East
-
India
and Africa top targets for international expansion
Dubai, 27 January 2014 – As the economic outlook
improves, multi-national companies are demonstrating an appetite for
international expansion into new markets.
According to the latest annual European Occupier Survey by global real estate
advisor, CBRE, 30 percent of the corporates surveyed identified the Middle East
as a potential destination for expansion in the next two years, a rise from 24
percent in 2012.
The survey, now in its fourth
year, polls corporate real estate decision makers at global corporations
collectively occupying approximately 2.7 billion sq ft (250 million sq m)
worldwide.
The survey demonstrates that more than half of
corporates [56 percent] name access to new markets and customers as the
principal driver for location decisions. This broad
appetite for expansion sees India and Africa emerge as destinations of choice.
When asked to identify where they intended to expand their operations, 48
percent named India (double the figure from 2012 at 24 percent), with China
mentioned by 42 percent, down from 60 percent in 2012. There is also a
significant increase in the number of corporates intending to expand into
Africa. This target market is now identified by a third of respondents [34
percent today], versus a fifth [21 percent in 2012]. In the case of both India and Africa, rapid
population and economic growth, coupled with increasing transparency and
improving infrastructure, is removing many of the traditional barriers to
entry.
Nick Maclean, Managing Director,
CBRE Middle East, said, “The Middle East is witnessing strong economic and
population growth which represents significant investment opportunities for
global businesses. Dubai being the region’s commercial and tourism hub remains
a focal point in the Middle East and a destination of choice for global
corporates looking to expand into this region or the lucrative African market.
The World Expo 2020 announcement in November last year has further fuelled this
positive sentiment and over the period of next six years we will see real
estate assets exhibiting strong growth and development.”
The survey shows corporates’
increased confidence in the economic recovery, with less than half [46 percent]
identifying weak economies as a concern. In 2012 the overwhelming majority [70 percent],
reported that the uncertain economic outlook in Europe was a key factor in
their real estate strategy, with cost management being the primary objective.
The shift in corporate focus
towards the future is also re-focusing attention of the corporate real estate
(“CRE”) function. There is now a greater desire for increased alignment between
real estate activities and broader business objectives with 72 percent of
companies surveyed noting this as an area for improvement. This indicates that
with the correct management, CRE functions could become facilitators of future
growth with the knock-on-effect of increased CRE outsourcing.
Mark Caskey, EMEA Head of Global
Corporate Services, at CBRE stated, “As we move into a phase of economic recovery it is clear
that occupiers are beginning to look beyond pure cost saving initiatives. In
the near term we expect a broad cost saving attitude to prevail, however, it is
encouraging that corporates are seeking out new target destinations
and adopting increasingly sophisticated workplace strategies.
“In particular, a core theme throughout our results has been
the increasing influence and focus on workplace strategies. It is clear
corporates are sitting up and taking note that ideal working environments lead to better employee productivity and enable
the best talent to be attracted and retained. Furthermore, labour outlay is
more expensive than real estate costs, so improved staff productivity has a
greater impact on companies’ profitability. We expect this trend to continue
next year and beyond.”
Richard Holberton, Director, EMEA
Research, at CBRE concluded, “While financial objectives still govern the corporate occupier
landscape, increasingly there is a greater desire to look toward the future.
This has seen a greater alignment between real estate activities and broader
business objectives. As corporate real estate teams become more strategic and
client focused, scope remains for the trend of outsourcing to persist.”
