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    NYU-Thesis-2010 NYU-Thesis-2010 Document Transcript

    • AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY LEND LEASE GROUP: A CASE STUDY by Martín I. Neiman A Project in Strategy & Innovation Presented to the Faculty of Management Submitted in partial fulfillment of the Requirements for the degree Master in Science in Management Graduate School of Management POLYTECHNIC INSTITUTE OF NEW YORK UNIVERSITY August, 2010
    • "There are really two critical dimensions of success in your business. The first is finding thegood deals. Finding those projects, finding those tenants, finding those locations that aregoing to be economically attractive. The second critical dimension of the business isexecuting those deals well. So you find the project but then you are able to build it on timeand make sure it is nice and deliver it up to expectation. Now you might think that that is anopportunistic process. But it’s not. Why do you find good deals? You find them because youhave special insight into tenants in that particular area, because you have an unusualknowledge of a particular geographic region, you find them because you understand thatparticular type of project better than the other guys. Because you have superior marketintelligence, because you have superior economic intelligence. Why do you have superioreconomic intelligence or market intelligence? Because you have a strategy." Michael E. Porter, Competitive Strategy and Real Estate Development, Remarks to the 1989 Harvard Business School Real Estate Symposium.2 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • AbstractThe current economic recession and its significant impact to the Property Industry as well asthe World Construction Industry represent an opportunity for reflection. After the enormousdamage caused by unprecedented levels of opportunism and speculation extended beyond thefinancial markets, it seems to be the perfect time to analyze the environment and rethink howto build a solid and sustainable strategic framework to be able to face the future challenges.In the present, fast-pace changes in the global markets in other industries are working asparameter for benchmarking, increasing customer expectations. Profound instability affectingmajor economies has evaporated the demand for private development. Private players arestruggling and many strong investors are hesitating to fund new projects. In Real EstateMarkets, risks are still considerably high while confidence continues to be low in manygeographic locations. The Credit Crisis has forced banks to remain conservative at the sametime as opportunistic capital continues to be on hold.In the short and medium term future, major demographic transformations will increase thedemand for housing and other facilities. In addition, the aging infrastructure is demandinggovernments a bigger economic stimulus. The year 2007 represented the inflexion pointwhere mankind reached majority of urban population. Urban areas will continue to grow andmore efficient cities will be required in the near future.In the meantime, there is a lot of interaction between government officials, regulators, theinfluential voices of the private sector and the public on new ways of fostering innovation.The necessity for innovative solutions in these industries has long been emphasized by bothinternal players and external observers. This continues to expand over professionalconsciousness, financial competitiveness, and the global community. Old practices arestarting to affect financial performances and the private sector reputation. In this environment,a 50 year-old Australian company seems to be emerging and riding through the storm.This study intends to analyze and compare Lend Lease Corporation strategic framework withthe historical behavior and culture within the Property Industry, evaluate its current position,weaknesses and opportunities to determine future challenges. Finally, this concludes with aset of recommendations to improve and strengthen a leadership position as the global providerof fully integrated sustainable property solutions.Martin i. Neiman, Aug. 20103 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Table of ContentsAbstract .....................................................................................................................................3 Table of Contents..................................................................................................................41.1 Introduction ........................................................................................................................6 1.1.2 Literature Survey ...........................................................................................................6 1.1.3 Data Gathering...............................................................................................................7 1.1.4 Methodology used in this document..............................................................................82.1 Theoretical Background ....................................................................................................9 2.1.1 The Conception of Strategy ...........................................................................................93.1 Presentation of the Case Study ........................................................................................19 3.1.1 Lend Lease Corporation Brief Overview ....................................................................194.1 External Environment Analysis ......................................................................................22 4.1.1 Introduction to the Property Industry ..........................................................................22 4.1.2 Overview of the main fields ........................................................................................23 4.2.1 Introduction to the Construction Industry ...................................................................25 4.2.2 Innovation Adoption in the Construction Industry ......................................................26 4.3.1 Current Challenges and Future Trends ........................................................................26 4.3.2 Global Demographic Trends & Challenges.................................................................27 4.3.3 Global Climate Trends & Challenges..........................................................................28 4.3.4 Infrastructure Trends & Challenges ............................................................................29 4.3.5 Technological Trends & Challenges ...........................................................................30 4.3.6 Information Trends & Challenges ...............................................................................33 4.3.7 Workforce Trends & Challenges .................................................................................34 4.3.8 Productivity Trends & Challenges ..............................................................................35 4.4 PEST Analysis for External Environmental Examination..............................................36 4.5 Porter Five Forces Analysis Overview ...........................................................................415.1 Internal Strategic Analysis ..............................................................................................46 5.1.1 Corporate Vision .........................................................................................................46 5.1.2 Corporate Culture ........................................................................................................46 5.1.3 Corporate Core Values ................................................................................................46 5.1.4 Corporate Value Proposition .......................................................................................47 5.1.5 Corporate Goals ...........................................................................................................47 5.1.6 Corporate Structure .....................................................................................................48 5.1.7 Stakeholders ................................................................................................................50 5.1.8 Strategic Business Relationships .................................................................................514 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.1.9 Business Segments ......................................................................................................52 5.1.10 Market Overview .......................................................................................................54 5.2 Value Chain Activity System .........................................................................................55 5.2.2 Secondary Activities ...................................................................................64 5.2.2.1.1 Procurement, the value of Stakeholders ............................................................66 5.2.2.1.2 Procurement, Total Facility Management .........................................................66 5.3 SWOT Analysis for Strategic Planning ..........................................................................73 5.4 Ansoff Matrix for Product-market Growth Analysis......................................................78 5.5 The BCG – Matrix ..........................................................................................................81 5.6 Porter Generic Strategies ................................................................................................836.1 Strategic Development - Lend Lease Strategic Mapping .................................................87 6.1.1 Value Proposition & Business Model Strategy ...........................................................87 6.1.2 Capital Allocation Strategy .........................................................................................89 6.1.3 Global – Local Collaboration Strategy ........................................................................91 6.1.4 Public Private Partnership (PPPs) Strategy.................................................................92 6.1.5 Retirement Sector Strategy ..........................................................................................94 6.1.6 Urban Regenerations Strategy .....................................................................................95 6.1.7 Sustainability Strategy .................................................................................................97 6.1.8 Innovation Strategy ...................................................................................................1057.1 Conclusion .......................................................................................................................110 7.2 Main Detected Problems ..............................................................................................112 7.2.1 Efficiency ..................................................................................................................112 7.2.2 Capital .......................................................................................................................113 7.2.3 Structure inefficiency ................................................................................................114 7.3.4 Human Resources Rewarding System.......................................................................114 7.2.5 Internal Research and Development (R&D)..............................................................1147.2 Recommendations ............................................................................................................1158.1 Bibliography....................................................................................................................1189.1 Appendix .........................................................................................................................1275 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 1.1 IntroductionThe main purpose of this work is to procure a strategic analysis for a leading player companyfrom the Property Industry involved in the entire value chain of this broad, extensive andexciting industry in the year 2010.As an approach to learn more about the current challenging environmental conditions and torethink about the future trends, this paper analyzes a selected corporation that participates indifferent business segments and sectors of the Property Industry worldwide. From inceptionof the development cycle, through the entire planning, design and construction process andbeyond, sometimes remaining as the asset & property manager or even the seller in somecases.This document presents the opportunity to compare a well-developed strategic frameworkbased on a clear vision of the future, with the backside of an industry carrying a historicallymonolithic culture supported by a remarkable rigidity to face and adapt to changes. Afterdriving thought this process, there will hopefully be achieved a counterpoint constructed byan analysis of the strengths together with a revision of the weakness, and opportunities.At that point, it will be possible to understand the most relevant issues affecting both theindustry and this specific corporation. Moreover, to conclude with a set of recommendationsregarding how to allocate its resources looking to face future challenges and to become aleader in providing integrated sustainable property solutions.1.1.2 Literature SurveyThe literature survey examines the literature used on this piece. The section summarizes andgives a general idea of what have been read, studied, argued and analyzed regarding thesubject. The organization of this review includes a chronological analysis of each strategicmodel taking into consideration as a working tool. It also oversee the most influential articles,books and other sources that where relevant to a particular topic, area of research, or theory,and provides a short description and a critical view of the reasons why it has been taken intoconsideration.The organization pattern systemizes well recognized academic material in an attempt toprovide a different point of view creating a theoretical background used for the developmentof the work. In addition, based on up-dated articles, books, readings, and other research, itwill describe the relevancy of each one in the building process and progress of this piece ofwork. Finally, this literature survey will put an emphasis in trends and key aspects that need tobe considered to take the best outcome out of the reading.6 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 1.1.3 Data GatheringThe term "Data collection" is generally used to illustrate a process of preparing and collectingdata that can be used for several purposes. In this piece of work the Data Collection processappear to obtain information from multiple angles that will supply a theoretical backgroundand for the construction of the project. In addition, the data was collected in order to provideinformation regarding the specific topic. 1As in many cases, the strongest focus on data collection took place early on the process ofaccumulation of information, and took a lower strength later during the analytical process.However, since the vast amount of elements and variables affecting the environment, theindustry and the specific company use in the case study, the data gathering process continuedto be intense during all the process, helping to give technical references, point of views, and aclear time and space reference to improve the quality of the analysis as well as the readerunderstanding of the big picture.The Data Gathering process has been structured in different stages. The first can be defined asthe "Pre-Collection activity", where the majority of the original material was found providinga basic foundation to set goals, targets of the work. Some definitions and methods wherestudied and a great part of the theoretical strategic sources were recognized. This processassisted in the overall framework creation of the work. This was one of the most crucial stepsof the whole process and even though a lot of information was capture afterwards, the valueof this original data in terms of structuring the analysis made the rest of it more organized andclear.The second stage can be considered as the "Collection" period. During this process, a lot offinding went on involving different sorts of reading. While the majority of them were comingfrom internet source, some key reading came from books found in the NYU-Poly library.Taking into consideration the limited timeframe available to develop the work, no personalinterviews, questionnaires or any contact with executives has been done. However, asubstantial amount of information came from surveys, interviews, and analysis already madethat was available on-line. As if there have been taken place interviews, this material wasextremely useful and provided real, accurate and updated-data which extremely enhance thefinal product. This interview and strategic presentations ensured both a baseline from whichto measure from and in many cases a target on what to improve. During the "Collection"period, a lot research was done regarding all the internal and external elements affecting theorganization.1 Data collection, source: http://en.wikipedia.org/wiki/Data_collection7 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 1.1.4 Methodology used in this documentThere are uncountable methods, theories, models and techniques created to analyze, formulateand implement strategies.2 Some have been selected according to the grade effectiveness,public recognition, and most importantly depending on the efficiency by which its use paysback to this study. In the first section of this document this methods will be described andevaluated to weather if they contribute to improve the construction of the analysis,formulation and implementation of a frame of strategies. 3This framework is structured along a Strategic Management background to conduct thedrafting, implementation and evaluation of cross-functional decision making system. Thisprocess will enable the organization to identify, focus, and achieve its long-term objectives,satisfying the mission, the vision, and assessing on the development of plans, policies andprograms designed to achieve these goals. Furthermore, it will help re-allocating resources ifneeded.The ultimate goal is to provide the enterprise with an overall direction and align each singlestrategy into a "strategic consistency". Arieu (2007), describes this consistency as the momentwhen "the actions of an organization are consistent with the expectations of management, andthese in turn are with the market and the context." 4In addition to all the theoretical background required to establish a framework of knowledgenecessary to develop analysis, a lot of research was done on the selected organization. First,an outline of was created to set a scope of work. Shortly after that, an overview examinationof the company was carried out, including internal information such as its history, missionand core competencies.Along with this, an internal strategic analysis was initiated to evaluate the firms vision, corevalues, culture, goals and objectives, market positioning and business segments, together withits products, services & project. This was followed by a breakdown of its corporate structure& global footprint, and operations activities based in Porters Value Chain Model (includinglogistics, operations, procurement, marketing & sales, services, technologies, HRM, andinfrastructure).Later on, a vast amount of material was selected to explore and understand the complexity ofall forces factors affecting the performance of the group. During this specific process, many2 List of Strategic Methods, Models, Theories, and techniques, source: http://www.12manage.com/i_s.html3 Wikipedia, Strategic Management, source: http://en.wikipedia.org/wiki/Strategic_management4 Wikipedia, Strategic Management, source: http://en.wikipedia.org/wiki/Strategic_management8 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • different sources where consulted to create a wide picture of all the economical, political,social, technological, and physical factored involved in this dynamic environment. Soon after,based on Porters Five Forces an extended analysis of the changing competitive atmospherewas made.Afterwards, based on many sources such as internal presentations, news paper articles andfinancial statements, the company strategic mapping was analyzed. Additionally, a significantamount of projects where analyzed in detail to understand the companys approach toinnovation and Sustainability. Different Models were selected for the strategic developmentprocess. Many single strategies were categorized and placed within a major strategicmapping.The final stage includes a detailed evaluation of the wide material made possible to identifyboth internal and external problems. These issues were taken into consideration to set a list ofrecommendations for the company, to conclude on establishing the growing path to the future.2.1 Theoretical Background2.1.1 The Conception of Strategy 5The utilization of a balanced Scorecard will be need for future evaluation of the futureperformance, progress and achievements of the business. The ultimate goal is to provide theenterprise with an overall direction and align each single strategy into a "strategicconsistency". Arieu (2007), describes this consistency as the moment when "the actions of anorganization are consistent with the expectations of management, and these in turn are withthe market and the context." 6Lamb (1984) defined Strategic management as an "ongoing process that evaluates andcontrols the business and the industries in which the company is involved; assesses itscompetitors and sets goals and strategies to meet all existing and potential competitors; andthen reassesses each strategy annually or quarterly [i.e. regularly] to determine how it hasbeen implemented and whether it has succeeded or needs replacement by a new strategy tomeet changed circumstances, new technology, new competitors, a new economicenvironment., or a new social, financial, or political environment.”5 Wikipedia, Robert S. Kaplan, Balanced Scorecard, Source: http://en.wikipedia.org/wiki/Balanced_scorecard6 Wikipedia, Strategic Management, source: http://en.wikipedia.org/wiki/Strategic_management9 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 2.2.1 Models for Strategic Analysis2.2.2 PEST AnalysisThe PEST analysis is key for strategic management. It consists of setting the framework ofmacro-environmental factors that will shape the way business will be conducted. Therefore,identifying the appropriate factors relevant to the specific business a company will becarrying and, most importantly, applying the analysis properly could make the differencebetween being successful or not, between being profitable or going out of business eventually.PEST represents “Political, Economic, Social and Technological” analysis. Some analystsadded “Legal” into consideration since legal aspects are always important when doingbusiness. And, most importantly, with the rising concept of ‘going green’ even in the businessspheres of life, “Environmental” is now part of the acronym as well.Political factors relate to how much involvement of the government there is in any giveneconomy. Specifically, these factors include areas such as taxes, labor laws, and diplomaticrelations that will determine trade restrictions or tariffs. In addition, the government hassignificant influence in important matters such as education, health and infrastructure.Economic factors include GDP growth, exchange rates, interest rates and inflation. All ofthese have great impact in businesses. For example, exchange rates are extremely importantfor companies involved with imports and exports; inflation will affect the ability for localbusinesses to buy goods or raw materials needed for their production.Social factors are sometimes overlooked. However, they are so important that many timesthey will determine whether a company will market a product in a specific country or not. Thecustoms, religious practices, and preferences of a social group will affect directly the demandof a certain product or services in a certain region or country. These factors also include thepopulation growth rate and age distribution, and the cultural and sociological aspects of asociety. The above will certainly shape the actions of a company, as well as the production,distribution or marketing efforts.Technological change is a key component of innovation. In turn, innovation will many timesbring success to any given company. An important factor to be considered by all businessshould be the constant aim to automate processes to increase efficiency and achievetechnological advancements. One way to get there is by investing in R&D. Unfortunately,most companies nowadays are too focus in cost-cutting that they forget an important way toset themselves apart from the competition. Ultimately, investing in technology and seekingefficiencies will most likely reduce costs and make the business more profitable.10 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Legal aspects of business have significant influence on how companies operate. Legal factorinclude anything from consumer, antitrust, employment and discrimination laws to health andsafety laws.Environmental factors include ecological and environmental aspects that affect certainindustries directly, such as agricultural-related and tourism. Weather and climate change areshifting how companies operate. Not only that, the recent awakening and strong awareness ofpotential dangers due to the critical impacts that climate change is already causing, is alreadyshaping existing markets and creating new opportunities.After analyzing this model, it is important to understand that some factors will have a biggerimpact than others depending on the type of company and business we are dealing with. If wefocus on a company that produces military-related goods, the political factors will beextremely important as the international relations with neighboring countries will determinethe existence or not of any conflicts or wars, which will impact directly the supply anddemand of goods in such an industry. On the other hand, if we focus on a financial company,the economic factors will be the ones to take closer look at since changes in the monetarypolicy or interest rates will make an impact. However, it is still important to take into accountevery factor. Furthermore, highly complex companies should carry PEST analysis in everydepartment and for better results, the analysis should be broken into geographical significanceand pay attention to factors in all levels: local, national and global.2.2.3 Porter Five Forces AnalysisThe Five Forces analysis was developed by Michael Porter in 1979. He focused on five mainforces that determine how attractive a given industry is given the competitive elements. Thisis a very important analysis because a company’s strengths cannot be viewed in absoluteterms. Even a company that has realistic objectives and the appropriate strategies to achievethose objectives will have to deal with the competition and the external forces in order to besuccessful. Porter’s analysis is meant to help conclude how competitively intense a givenmarket is, and in this analysis, the concept of attractiveness relates directly to profitability.The higher the chances of achieving profitability, the more attractive that industry will be.And in contrast, a very competitive industry will be considered unattractive. Going back tothe consideration of internal and external factors in the SWOT and TOWS analysis, Porter’sFive Forces analysis is made of two forces deriving from internal sources and three derivingfrom external sources. The first two forces are considered vertical competition and include thebargaining power of customers and the bargaining power of suppliers. The other three forcesare defined as horizontal competition and include the threat of established competitors, thethreat of substitute products, and the threat of new competitors.11 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • The bargaining power of buyers is the ability of customers to put the company under pressure.Some factors relevant here would be the buyer switching costs relative to the company doingso, the existence of substitute products or output, the buyers’ information accessibility, andthe dependency on the existing channels of distribution. The bargaining power of suppliers isthe ability of suppliers to put the company under pressure. If there are few substitutes, theycan represent high pressure. Some factors to consider are the suppliers switching costs relativeto the company doing so, the existence of substitute inputs, the suppliers’ informationaccessibility, and the power of distribution channels.As far as the main factors for the threat of existing competitors, companies should payattention to competitive advantages and how sustainable they are, how much more innovativethey are compared to the established competitors, and how high are the levels of advertisingexpense. When considering the threats of substitute products or services, companies shouldalways be aware of how many substitute products are available in the market and the buyers’tendency to substitutes. In addition to those, understanding product differentiation is key. Andcertainly last but not least, companies need to consider the threats of the entry of newcompetitors to the industry. The more profitable a market is, the more firms will be attractedto it. Eventually, the phenomenon of new competitors entering the market will decreaseprofitability for all participants. Profits will tend to approach zero in markets of perfect orpure competition. The main factor to consider here would be the presence of barriers to entry.Markets are more attractive when there are high entry barriers; the new competitors will havea hard time entering those markets while the players already in it will have time to consolidateand establish their image and claim a share of the pie. Some other factors to consider aregovernment policies, access to distribution, capital requirements, absolute cost advantage andlearning curve advantages.According to Porter, to make the best use out of this Five Forces analysis, companies shoulduse this method at the most basic level. Instead of using it at the industry or sector as a whole,they should use it specifically at a line-of-business level.2.2.4 Value Chain AnalysisThe Value Chain analysis was also developed by Michael Porter. This analysis highlights theimportance of value chains in every company, where products go through every component ofthe chain in order gaining value in each activity. The key idea is that products get more addedvalue from the chain of activities than they would get from the sum of the values of allactivities. Value chains are formed by the primary and support activities. The primaryactivities include the inbound logistics, the operations, the outbound logistics, the marketingand sales, and the service, while the support activities include the company’s infrastructure,12 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • the management of human resources, the technology and research & development, and theprocurement.The concept of value chains is so important that it can be applied to entire supply chains anddistribution networks instead of just a specific company. The interactions of local valuechains are capable of creating extended value chains that were defined by Porter as a ValueSystem. The value system includes the value chains of the suppliers, the company itself, thedistribution channels, and the customers. The idea is that everyone involved in this valuesystem will benefit in one way or another.2.2.5 SWOT AnalysisThe SWOT analysis was created by Albert Humphrey. SWOT represents Strengths,Weaknesses, Opportunities, and Threats. This method is used to evaluate the key external andinternal factors that are favorable or unfavorable to carry on a project or a business as awhole. Before the analysis can be carried out, the company needs to set the objective orobjectives to be achieved. Once the ultimate goal is in place, this strategic planning willidentify the attributes that will help the company reach the objective (strengths), the attributesthat will be detrimental to reaching the objective (weaknesses), the external conditions thatwill be helpful to achieving the objective (opportunities), and the external conditions thatcould do damage to the objectives (threats).Companies that successfully carry on a SWOT analysis will have better chances or reachingtheir objectives, or even more, they will have a better shot at reaching them quicker and in acheaper and more efficient way. The reason for this is because a well done analysis willdepict clear steps of action towards achieving the objectives. The management or peopleinvolved in the decision making process will need to determine if the objective is attainablegiven the SWOTs. Otherwise, they should proceed and identify a different objective, a morerealistic one.As mentioned above, SWOT analysis is used to identify the key internal and external factorsthat are important to achieve the objective. The internal factors are internal to the organizationand the external factors are found in the external environment to the organization. In order tocarry a more significant SWOT, the management teams can use a PEST analysis to identifymore effectively the external factors (threats and opportunities).Finally, a very important note is that an attribute could be considered to be a strength for aspecific objective, but could be viewed as a weakness in achieving another objective, hencethe importance in identifying the relevant factors and selecting the objectives appropriately.13 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 2.2.6 TOWS AnalysisThe TOWS analysis is similar to the SWOT analysis. In fact, both acronyms make referenceto the same concepts of Strengths, Weaknesses, Opportunities, and Threats but in differentorder. The only difference is that the SWOT method emphasizes the factors in the internalenvironment (strengths and weaknesses) while the TOWS method emphasizes the externalenvironment (threats and opportunities). Either approach is very effective for companies whentrying to identify strategic options for a specific project or a whole new line of business.A strategy is essentially the path through which companies will reach their objectives. And aTOWS or SWOT analysis will show them the way. The most important takeaway afterconducting any of these two methods should be for management teams to have the ability toanswer the following key questions: how to make the most of the strengths, how to overcomethe weaknesses, how to take advantage of the opportunities, and how to deal with the threats.2.2.7 Ansoff MatrixThe Ansoff Matrix was presented by Igor Ansoff to depict different corporate growthstrategies. Essentially, the Ansoff Matrix identifies the present and potential products andconsumers for a given company. By considering growth possibilities through the existingproducts and new products, and in current markets and new markets, Ansoff describes fourstrategies given the possible product-market combinations.The first strategy is market penetration, where the company intends to achieve growth throughthe products that is already offering in the existing markets. The goal is to increase marketshare. This strategy is the least risky for a company since it leverages the already existingresources and capabilities. If the market grows, the company will grow automatically bysimply maintaining its market share. However, the danger of this strategy is saturation. If thecompany reaches the capacity limits, it will have to adopt a different strategy to keepgrowing.The second growth strategy described by Ansoff is market development. Companies applyingthis strategy will aim to grow by targeting their existing products to new segments of themarkets. This could translate into a firm extending the supply of its products in new countriesor regions. If the product is perceived by the new customers as being a high quality product atan accessible price then the company will have good chances to grow. However, companiesadopting market development over market penetration strategy will assume the higher risksassociated with trying to pursue new markets.14 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • The third strategy is product development. This is simply the innovative desire for companiesto develop new products and target them to its existing market segments. This strategy mayapply well for companies whose strengths are more based in the customer rather than havingthe strengths in the product itself. In such cases, the firm will seek growth by developing newproducts for its already existing customer base. Just like with the market developmentstrategy, product development will carry more risk than just trying to grow by rising marketshare.And last but not least, the fourth growth strategy in the Ansoff Matrix is call diversification.When companies adopt this strategy they try to generate new business by offering newproducts in new markets. This is clearly the riskiest of all four strategies because companiesthat choose to adopt it will have to face the challenges of new product and marketdevelopment simultaneously. However, companies may see this strategy appealing if theyconsider one of the most basics foundations in finance: the higher the risk, the higher thereturns.2.2.8 Growth-Share MatrixThe BCG Matrix was created by Bruce Henderson for the Boston Consulting Group in 1968.The main purpose was to provide a chart that would help companies analyze their productlines. This way, a firm can better allocate their resources and improve in certain areas, such asstrategic and product management. From a marketing perspective, this tool is very useful forportfolio planning. This chart contains two controlling aspects: relative market share andmarket growth. In order to use this matrix appropriately, a company should place eachproduct in their portfolio onto the matrix and then plot their competitors’ products tounderstand the relative market shareThere are 4 products types that can be drawn from this matrix, depending on which quarterthey are placed on. Dogs are also known as products with a low share of a los growth market.Usually these are very profitable products as they tend to require the company’s money ratherthan generate it. Often times it is advised to eliminate these. Cash Cows are those productswith high share of low growth market. Thus, these tend to generate more money than isinvested in them, and therefore should be kept. Problem Children is a term that refers toproducts with low share of high growth market. They need a lot of resources and do notgenerate so much in return. Lastly, stars are those products that are in high growth marketswith a relatively high share of that market. These usually generate great income so it isadvised to build up this type of products. The best scenario is to have a balanced portfoliowith all these kinds of products, except for dogs.15 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 2.2.9 Business ModelA business model explains the grounds of how an organization produces or delivers value tocustomers. It is especially important for entrepreneurs founding a new business, but alsomanagers of established companies should dedicate significant time to business modeling toexplore alternatives of future developments and growth. The term business model is mainlyused to describe the core aspects of a business, such as its purpose, the organizationalstructure, its infrastructure, its policies, its strategies and operational processes.The essence of a business model is that it will define how companies will provide value toclients, who will pay for the products or services offered, which will bring profits into thefirms. The key enigma for companies to figure out is what clients want and how they want it.Once they identify this, they need to organize their resources to meet the client needs. Manytimes companies overlook the fact that client needs evolve and they need to evolve with them,making all the necessary adjustments to their strategies, their production lines or servicesofferings. This is why business models are crucial not only at the time of the foundation of thecompany but all throughout its existence. Examples of bad business modeling can be foundduring the dot-com crisis. On the other hand, some examples of good business models can beattributed to companies such as McDonalds, Wal-Mart, Blockbuster, Dell Computer, eBay,Starbucks, Apple, among others. These firms certainly changed their respective industries andthe customers experience in a way that business will never be the same.Today, technology plays an extremely important role and companies can take advantages ofendless revenue opportunities that could not have been even dreamed of before the internetrevolution. Some retail businesses actually generate more revenue via their e-Commercechannels than at their physical stores. Some others do not even have stores and are only web-based; Amazon.com is the perfect example. A great advantage these type of firms posses isthat they can generate revenue 24/7 and they can access markets and regions all over theworld.2.2.10 Porter Generic StrategiesMichael Porter’s generic strategies model consists of three general types of strategies thatcompanies can use to generate and maintain competitive advantages. There are two importantdimensions for these strategies. Strategic scope is a demand dimension, which considers theintended target market. Strategic strength is a supply side dimension and it is concerned withthe core competencies of the company, namely product differentiation and cost efficiency.16 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • The 3 main strategies are known as cost leadership, differentiation and market segmentation.Cost Leadership refers to the firm gaining market share by offering the lowest prices, which isusually very appealing to cost-conscious consumers. In order to offer the lowest price whilealso maintaining profitability, a firm must operate at lower cost than its main competitors.There are three key ways to do this: achieving high asset turnover, maintaining a low directand indirect operating cost and controlling over the supply/procurement chain to ensure lowcosts .Differentiation Strategy aims to come up with a very unique product or service that will standout from throughout the industry. This differentiation among the others can be associated withany features, such as technology, brand image, design, quality, customer service and more.When this strategy is used, a firm usually will gain brand loyalty, which helps them toeliminate competition and earn above average returns .Lastly, there is the focus or strategic scope, as it describes the scope over which the companycan compete in the market by either providing the lowest price or the most unique goods. Inother words, a company can decide if they want to be part of a defined focused market or aimfor a broader mass market. If the focus is narrow, then there are only a few target markets alsoreferred to as niche strategy, where there are groups with specific needs and wants. If acompany adopts a broad focus scope, the concept is similar, to match the customers’ needsand wants of a mass market, competing on wither low prices or brand recognition andsuperior quality .2.2.11 Strategy Maps & Balanced ScorecardStrategy maps are diagrams that companies use to document their main strategic goals. Thecreation of the strategy map is the first step towards the success in strategic management. TheBalanced Scorecard is a strategic performance management tool that allows managers tomonitor the execution of the activities by the people who report to him or her. Managersidentify certain financial and non-financial measures and assign targets to them. The ideabehind this is that after conducting reviews management teams are able then to determinewhether the expectations were met by the current performance. This will lead to strengtheningcertain weak points and develop areas that need improvement.The balanced scorecard method involves a clear definition of the business strategies. Itusually takes several intense brainstorming sessions in which high-level management shouldbe involved. The participation of managers of all lines of businesses within the organization isvery important in order to consider all functions and processes involved. Transparent17 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • communication and fluid interaction between all levels and departments may be one of thekeys to the success of a business.Robert Kaplan and David Norton highlighted four main steps in the design process of theBalanced Scorecard. First, the management has to translate the company’s vision intooperational goals. Then, the vision needs to be communicated and linked to individualperformances. The third step is business planning. And last but not least, the fourth step,which often gets overlooked, involves obtaining feedback and applying the lessons learned inorder to adjust strategies accordingly.18 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 3.1 Presentation of the Case Study3.1.1 Lend Lease Corporation Brief OverviewLend Lease Group, inc. is a multinational property development, property management andinvestment company based in Australia, which became one of the world leaders in providingfully integrated property solutions.3.1.2 Core CapabilitiesThe company built its position out of a highly efficient process including development,investment management, project & construction management and asset & propertymanagement capabilities, together with a strong commitment to creating and buildinginnovative and sustainable solutions, forging partnerships and delivering solid investment solutions,returns.3.1.3 Lend Lease Corporation Logo3.1.4 Lend Lease Corporation Brief History 7Lend Lease Corporation was born out of a construction business founded by Dutch immigrantDick Dusseldorp in the 1950s.The founder visited Australia looking for opportunities as partof the Dutch Company Brederos Bouwbedrijf. After his visit, Lend Lease Corporation was Bouwbedrijf.formed in 1958, to provide finance for building contracts being undertaken by Civil andCivic, as the largest shareholder. He signed a productivity agreement with the BuildingTrades Union after wining stage one of the Sydney Opera House. 8In the 1960s Lend Lease introduce superannuation for staff 20 years before becoming easeindustry practice, and becomes a progressive employer The company acquires Civil & Civic employer.from Brederos Bouwbedrijf expanding its operations all over Australia, and commences in Bouwbedrijf,New Zealand. The "Australia Square" opens becoming the country’s first lightweight concrete .building.7 Lend Lease Corporation History Highlights,Source: http://www.lendlease.com/llweb/llc/main.nsf/all/all_who_history8 Lend Lease Corporation History, source: http://en.wikipedia.org/wiki/Lend_Lease_Group19 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • In the 1970s, Lend Lease established new brands in Singapore and the United States. Thecompany introduces Profit share for employees in Australia, continuing as a leader inemployee benefits. The Annual revenue exceeds $300m. The GPT group is formed, becomingone of the first and largest diversified property trusts in Australia. The company invests A$100m to open "MLC Center". The Prime Property Fund is formed, as one of the firstcommingled real estate accounts for US pension funds.In the early 1980s, together with the founder retirement, Lend Lease starts to be perceived asone of Australia’s leading blue chip companies, while continues to set the benchmark inemployee benefits. Australian Prime Property Funds (APPF) is founded to provide theopportunity to institutions to invest in Australian portfolios properties managed under a newprofessional platform. ACTU/Lend Lease Foundation is established as a way of encouragingpeople acquiring new skills, and looking after employee and community wellbeing. The LendLease Youth Council, the Lend Lease Apprentice Council, and several Equal OpportunityManagement programs are created. Lend Lease acquires the MLC Center becoming a whollyowned subsidiary. The Sydney Football Stadium and National Tennis Centre in Melbourneare completed.In the 1990s, both the formation of Actus Lend Lease to develop large-scale military housingcommunities, together with the acquisition of Bovis-P&Os Global Project Management,build up the companys International operations. In addition, Lend Lease expands itsoperations through the Americas and Asia and commences in Europe with the acquisition of 5real estate investment businesses from AMRESCO and The Boston Financial Group. TheBluewater Center opens, becoming a major retail and leisure destination in Europe. At thesame time, the Aquatic Centre at the Sydney Olympic site opens its doors. The EmployeeShare Plan Program is extended to US while the Lend Lease Foundation becomes global.Australian Prime Ministers Award for Business and Community Partnerships is given to theLend Lease Corporation.In the beginning of the 2000s, Lend Lease celebrates its 50th Anniversary. The companyfocuses its capabilities towards becoming one of the world’s leading fully integrated propertysolutions providers, after acquiring the MLC Center and several investment managementbusinesses in the United States. Major sales were the US Real Estate Investments EquityAdvisory, IBM Global Services Australia, Lend Lease Mortgage Capital / Holliday FenoglioFowler, and Housing & Community investing / CapMark Services. Probably one of the mostimportant ones is the Australian firm Delfin Corp., focused in residential communitiesdevelopments. The acquisition of Babcock and Brown Communities, rebranded as Lend LeasePrimelife, made Lend Lease Australias largest provider of "senior living" retirement villages.20 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Another major acquisitions was The Crosby Group plc., a urban regeneration specialist in theUnited Kingdom. The company wins a £1.5b "urban regeneration" in London, which includesAthletes Village at Stratford City. The GPT Group decides to split from the company andinternalize management. Millers Point Youth and Employment Partnership, chaired by LendLease, wins NSW Prime Minister’s Community Business Partnership Award for Excellence.In the past five years, Lend Lease has developed Australia’s first 5 Star Green Star and 6 StarGreen Star buildings. The company was selected as developer for Stage 1 of Barangaroo, thelargest CBD development in the history of Sydney with an end value of A$ 6 billion. Onanother major event of its history, Bovis Lend Lease is selected by the WTCMF (World TradeCenter Memorial Foundation) as Construction Manager for the US$360 million Memorial andMuseum to be built at Ground Zero in New York.99 Bovis Lend Lease History source: http://www.bovislendlease.com/llweb/bll/main.nsf/all/all_who_history21 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 4.1 External Environment Analysis4.1.1 Introduction to the Property Industry heThe Property industry or Real Estate Industry has shown over the last few decades one of thehighest growth in the world’s economy. Since the development of private property ownership,real estate has become a major area of business. The industry has evolved into several distinct edfields, and many different businesses have been created as a result of this, including propertyappraisal, property brokerages, property development, property management, real estatemarketing, real estate investing, relocation services, and corporate real estate. These services,businesses may specialize in a particular type of real estate, within each field, such asresidential, commercial, or industrial property. In addition, almost all construction businesseffectively has a connection to real estate.The market sector value, according to a study run by ¨The Economist¨, in developedeconomies, Real Estate Assets at the end of the year 2002 were valued in $115 trillion USdollars, and the breakdown was the following: $48t for residential, $14t for commer commercial, $20tfor equities, $20t for government bonds, $13t for corporate bonds. These make real estateassets 54% and financial assets 46% of total stocks, bonds, and real estate assets, withoutcounting bank deposits, insurance ¨reserve assets¨, natural resources, and human assets. resources,The current conditions facing the industry are difficult as a consequence of a severe economicdownturn over the past two years produced by an extremely high speculative environmentthat ended up with the Global Financial Crisis10 and the Subprime Mortgages Credit Crisis11in 2008, becoming the deepest recession since the Great Depression of 1930 1930.The map shows in red the most affected economies in the world and those where the impactwas less profound. In the following graph, it is clear the change in the US Subprime lending10 Global Financial Crisis, source: http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%93201011 Subprime Mortgages Credit Crisis source: http://en.wikipedia.org/wiki/Mortgage_crisis Crisis,22 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • and its significant expansion between 2004 and 2006, which ended being a major factor forthe collapsing of the financial system.After two years, there are still risky clouds when we analyze the immediate outlook.However, there seems to be many opportunities in the property industry both for thosecompanies which remain liquid as well as for redefining the political agenda and theregulatory system.In Australia for example, Governments have not only stimulated economic activity with ,national-building investment programs, they also have committed to modernize the rules that buildinggovern the marketplace. The main present concerns are engaging governments to create newideas in order to redefine the regulatory tax and investment framework. They want to re regulatory, re-connect the marketplace and re engage the key stakeholders, regulators and customers with re-engageproperty industry leaders.4.1.2 Overview of the main fieldsThe main fields analyzed in this piece of work are Real Estate investment, property Estatedevelopment, property management and construction.Investments in Real Estate involve the purchase, ownership, management, rental and / or saleof real estate property to generate a profit. The corporation designed for investing in realestate is named REIT – Real Estate Investment Trust. This type of investment reduces oreliminates corporate income tax. In return, REITs are required to distribute 90% of their23 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • income, which may be taxable, to its investors. This structure was designed to provide asimilar framework for real estate investment as mutual funds provide for investment in stocks.This type of corporation can be held as a private or public company, being the last one able tobe listed on public stock exchanges and can be qualified as a mortgage, equity of HybridCompany.Real Estate Development is a multifaceted type of business, which encompasses activitiesfrom renovation of existing buildings to purchase of raw land and the sale of improvedparcels to other individuals or companies. The Developer coordinates activities orchestratingthe development process. They are typically in charge of purchase land, determine themarketing of the property, develop the building program and design, obtain the necessarypublic approval and financing, build the structure, and lease, manage, and ultimately sell it.This may include financing the real estate deal, building or having builders build a project,creating, imagining, and controlling the process from the beginning to the end. Architects,city planners, engineers, surveyors, inspectors, contractors, leasing agents are some of thecounterparts that participate in the process. The main goal of the developer is to convert anidea into a real property that can be considered a Real Estate product. The developer is theone who takes the greatest risk and receives the greatest rewards in the industry.Property management is the field that deals with all the Real Estate operations forcommercial, industrial and/or residential properties taking a managerial role similar to otherbusinesses. It also includes the management of all personal property, equipment, tools andphysical capital assets acquired and used to build, repair and maintain the property. Themanagerial role involves the processes, systems and manpower required to manage the lifecycle of property including acquisition, control, accountability, maintenance, utilization, anddisposition.12Construction is considered a process that consists of the building or assembling aninfrastructure, as part of the field of architecture and civil engineering. At a large scale,construction is a multitasking group of activities. The job is managed by a figure namedproject manager, and supervised by others called the construction manager, design engineer,construction engineer and / or project architect. An effective planning, including technicaldocuments, scheduling, budgeting, availability of materials, logistics, legal documentation,site safety, environmental impact analysis, is essential to reach a successful execution of aproject.13 The main stakeholders and activities can be found in the appendix.12 Property Management field description, source: http://en.wikipedia.org/wiki/Real_estate13 Construction Industry Introduction, source: http://en.wikipedia.org/wiki/Construction24 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 4.2.1 Introduction to the Construction IndustryThe global construction industry is one of the biggest and most important industries in theplanet. The industry is mainly based in urban areas, being its contribution to the world’seconomy is extremely important both as a growth producer and employment generator aswell. Its input to the global GDP reaches one tenth of the globe’s cumulative amount, and it isthe provider of almost seven percent of the total employed person in the whole world. Theannual construction total spending estimation is close to $2.3 trillion, where $1.2 trillion wasspent in the US alone during the last period prior to the Global Financial Crisis. The offset ofits boundaries has become so immense that the energy, in the form of electricity or fuel,consumed by the industry is around two fifth of the total energy consumed all over the planet.From another point of view, the consumption of resources is also extremely high reachingalmost fifty percent of the total global resources.This very heterogeneous industry is considered the base of the world’s economy, achievedthrough development and construction of residential and commercial real estate properties,and of hard infrastructure projects including bridges, tunnels, roads, railway tracks, airports,and soft infrastructure projects such as education and health facilities. This is the reason whyeconomists analyze the World Construction Industry a method to judging the performance ofthe economic condition of a country. 14The industry has experience a boom in the past few decades and suffered several crisis due toits cyclic characteristic. The growth of the world population, especially in the "Asian Tiger"countries, China and India, has accelerated the process.The industry Facts: 15Inputs > it is the largest sector in terms of energy consumption • 2/5 of energy consumption worldwide and 1/2 of global resource utilizationOutputs > it is one of the highest influential industries for the worlds economy • Generates 1/10 of the global GDP and offers 1/7 of global employment14 World Construction Industry details,Source: http://www.economywatch.com/world-industries/construction/world.html15 World Construction Industry facts, source: http://www.economywatch.com/world-industries/construction/25 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • The industry has been conservative and organized and unions have strong presence especiallyin developed economies. On the contrary, in developed countries is still unorganized. Growthhas been lower in comparison to other industries, being efficiency one of the main issues toreduce speed of development. Interoperability issues have probably been one of the majorproblems.16 Only in the US market $15.8 billion has been lost due to inefficiencies. However,major shifts have started to affect the industry since the inclusion of software andcommunication technologies.174.2.2 Innovation Adoption in the Construction IndustryThe construction industry has been characterized by its slow adoption of innovations, mainlybecause of some impediments. The most relevant were the resistance to change both byhumans and institutions, perception of undesirable supplementary project risk associated withinnovations, fragmentation of the industry producing a lack of financial mass necessary topursue innovation, and ineffective knowledge management due to the uniqueness of itsproducts that affected mass manufacturing principles and innovation. In summary, the focuson the short term project-based conception and the cyclic quality of the business, blockedcontinual improvement processes in the industry, while companies were more concerned indealing with new delivery methods, design standards, and legal structures for every project. 184.3.1 Current Challenges and Future TrendsThe World Construction Industry is currently facing a number of deep challenges that aredriving by internal and external forces. These conditions are motivating some profound16 Interoperability, source: http://en.wikipedia.org/wiki/Interoperability17 Stakeholders & engineering process,Source: http://en.wikipedia.org/wiki/Engineering_process_outsourcing#AEC_stakeholders18 CII, Breakthrough Strategy Committee (BTSC),Source: t https://www.construction-institute.org/scriptcontent/break.cfm?section=break26 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • transformations in the way in which people design, build, operate, and maintain buildings andinfrastructure. While these new approaches allow to design and create new technologies toaddress challenges in the construction industry, innovations will probably affect other sectorsof the value chain such as operations, security, maintenance, emergency planning, and of 19course, urban planning, at both short and long term. An overview analysis of the majorchallenges facing the industry is essential to understand such a complex environment.Moreover after the global financial crisis, that came as a consequence of the high speculativeenvironment at the end of 2007.4.3.2 Global Demographic Trends & ChallengesDemographic changes are a major trend not only for the Property and Construction Industry,but also for the whole world economy. It is a known fact that human population is growing.This growth is impacting deeply from different perspectives. The main three impacts are theaging growth, the disparity between population growth and GDP growth, and the urbangrowth.Professor Joel Cohen from Rockefeller & Columbia University is a specialist in this subject.In a lecture given in May 2009 at the Hebrew University20, he mentioned and demonstratedhow "the World economy grew faster than population in 20th century". GDP per person grewmuch faster than human population. According to his study, in 1900, human population was1.6 billion, GDP per person was $1,263 and World GDP was $2 Trillion. In 1950, humanpopulation was 2.5 billion, GDP per person was $2,138 and World GDP was $5 Trillion. Andin 2000, human population was 6.1 billion, GDP per person was $5,204 and World GDP was$32 Trillion. The result of this study allows concluding that more people live in poverty todaythan in 1900. It has been calculated that 2.7 billion people live under US$2 per day.21 Theseare very complex issues that stand outside the boundaries of this paper. However, it isprofoundly affecting the way people is living and will be living in the next generations.The third major demographic trend is Urban Growth. The year 2007 represented an inflexionpoint where the majority of human population appeared living in cities for the first time inhistory. According to Cohens study, in the year 2000, both rural and urban populationreached 3 billion people. By 2050, it is expected to have 3 billion people living in rural areasand 9 billion living in urban conglomerates. This impressive statistic shows that within the19 Blog Between the Poles, All about infrastructure,Source:http://geospatial.blogs.com/geospatial/2007/09/convergence.html20 Human Population to 2050: Problems and Opportunities.Source: http://www.youtube.com/watch?v=-4vOz5JmBPA&feature=channel21 Human Population to 2050: Problems and Opportunities, Professor Joel Cohen from Columbia University.Lecture at the Hebrew University. Source: http://www.youtube.com/watch?v=-4vOz5JmBPA&feature=channel27 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • next 40 years urban residents will quadruple its size, becoming 3 times larger than ruralpopulation. Even though the majority of the shifts impacts will affect developing countries,especially middle range cities (1-5 million), this is a global trend. As a consequence, to supplythese demand humans must be building an equivalent of a 1 million people city every 5 daysuntil 2050. Many issues will have to be taken into consideration in order to maintain anaverage life quality, as Energy, Water, and Waste Management will become top priorities.Energy consumption will be extremely increased and much more efficient cities will berequired. Moreover, in countries like China or India, urban growth could probably affect foodavailability generating a social disaster.22 It sounds extremely problematic indeed.Furthermore, in the next decades the global population aging over 60 years old (60+ plus) isexpected to increase from 10% to 23%. By the year 2050, 60+ is expected to triple and 80+.This is a major phenomenon shaping human demographics, and this change seems to be amajor trend affecting many industries, and the property industry is not an exception.In Professor Cohens study, he declared that "aging is a problem bought by success." He saidthat "lower fertility and long life, especially in developed countries are the two main drivers,being lower fertility its first contributor". In addition, Dr. Cohen demonstrated the differencesaffecting the demand for energy consumption connected to aging, comparing a standardfamily household with older residents. The contrast was clear. The study illustrated thevariables driven by aging showing how residential energy consumption increases, whiletransportation energy consumption decreases. As a result, older household consumption ishigher than younger household energy consumption. Finally, to summarize this idea, heexpressed that "US, China, India & Africa geographies are the main affected by this trend".This study demonstrates the importance of becoming a specialist in the retirement sector inorder to both providing sustainable solutions to mitigate the forecasted impact, plus takingadvantage of the huge market trend as well.4.3.3 Global Climate Trends & ChallengesThe awareness of the global warming phenomenon has increased from 11% to 35% in theUnited States between 2003 and 2006 according to the Global Warming Survey run by theresearch institute of MIT. In addition to this, in the US alone (the main energy consumerworldwide), buildings are responsible for over 39% of total energy consumption, 68% of totalelectricity use, and 38% of the total carbon dioxide emissions. These facts in conjunction arecausing a strong pressure on the industry to replace old techniques and to renovate oldbuildings to minimize impact on the environment as well.22 Human Population to 2050: Problems and Opportunities, Professor Joel Cohen from Columbia University.Lecture at the Hebrew University. Source: http://www.youtube.com/watch?v=-4vOz5JmBPA&feature=channel28 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • As a consequence, in recent years, Green Council organizations are becoming moreinfluential in many countries, being the UK, the US, and Australia on the front seat of thisrevolution. Environmental organizations are pressing to reduce fossil fuel consumption ofbuildings by 50 percent by the year 2010, pursuing the goal of achieving carbon-neutralbuildings by 2030.The Leadership in Energy and Environmental Design Green Building Rating System (LEED),developed by the U.S. Green Building Council (USGBC), is setting the standards to achievingenvironmental sustainable solutions for the AEC industry. Since its creation in 1998 untilpresent, the organization has incorporated more than 14,000 professionals all over the US,which has represented more than 1,062 billion square feet of development (July 2007 USGBCfigures).4.3.4 Infrastructure Trends & ChallengesThe issue of infrastructure becoming obsolete is expected to be a major problem in manyparts of the world. The American Society of Civil Engineers (ASCE) presents reports everytwo years on the situation of infrastructure in the United States, where evaluates roads,highways, and transit among other sectors. Between 2003 and 2005 the grading has beendecreasing and barely being approved. The organization has estimated traffic congestion costsfor the US economy at $67.5 billion annually in terms of lost productivity and wasted fuel.Moreover, the Federal Highway Administration (FHwA) has reported that outdated road andbridge designs, pavement conditions, and safety low standards have implications in one thirdof all fatal highway accidents. The ASCE estimates on average 43,000 fatalities per year onvehicle accidents in the United States, with a cost of $230 billion per year to all U.S. citizens,which can be translated into $819 per resident on medical costs; lost productivity; traveldelay; and workplace, insurance and legal costs every year.The ASCE estimates an investment of $1.6 trillion over five years is required in order to bringUS infrastructure to good condition. Considering the US as one of the most advancedcountries in the world, it becomes clear that aging infrastructure is global problem.29 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 23The graphs show en estimation of the square footage that will be renovated betweenthe year 2010 and the year 2035, emphasizing the impact of old infrastructure on theeconomy and the construction industry.4.3.5 Technological Trends & Challenges“New computer programs may soon change the way groups of people work together -- andstart delivering the long-awaited payoff from office automation.” 24 By Louis S. Richman REPORTER ASSOCIATE Julianne Slovak June 8, 1987One of the most significant aspects that are associated with the industry trends is howtechnology is affecting every process, the way people connect to each other and the way23 Architecture 2030.org24 CNN Money, Fortune Magazine quotation, source:http://money.cnn.com/magazines/fortune/fortune_archive/1987/06/08/69109/index.htm30 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • activities take place. These IT technologies are pacing up the work thanks to several cuttingedge technologies which are being implemented, mainly to raise the efficiency level ofengineering and designing in the industry. 25The adoption of several different types of software application systems developed since 1982,when Autodesk, Inc. first release its famous AutoCAD software, set the beginning of arevolutionary transformation, which changed the way stakeholders relate with each other.Nowadays it is very rear to find a company or a professional who is not familiar or evenproficient with these systems, which became a basic skill necessary to participate in theindustry. The AutoCAD26 has been extensively adopted as a “sort of standardized” CAD(Computer Aided Design or Computer Aided Drafting) software application for 2D and 3Ddesign and drafting. The program was one of the first to run in personal computers. At thattime, most of the versions used primitive entities such as lines, polylines, circles, arcs, andtext to virtually construct objects. Since the mid 1990s, with the API (Applicationprogramming interface), modern AutoCAD began to include a set of basic solid modeling 3Dtools. The program is available in several languages including English, German, French,Italian, Spanish, Japanese, Korean, Chinese Simplified, Chinese Traditional, Russian, Czech,Polish, Hungarian, Brazilian, Portuguese, Danish, Dutch, Swedish, Finnish, Norwegian, andVietnamese to reach the most important domestic markets. In the past 20 years, AutodeskR&D department lead the market, releasing all types of software solutions focused onproviding the AEC Industry with the necessary support to successfully accomplish the mostadvanced and complex projects. With all this amazing technology in place, however, there25 Source: http://www.economywatch.com/world-industries/construction/trends.html26 Autodesk, AutoCAD Software, Source: http://en.wikipedia.org/wiki/AutoCAD31 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • still was a wide gap to cover in terms of how all this valuable information flows among thebig number of stakeholders in a clear and efficient way.In the recent years, many other advanced solutions for architecture, engineering, andconstruction were release by Autodesk,27 including AutoCAD Architecture, AutoCAD MEP,and AutoCAD Civil 3D, 3D Studio and Maya for modeling complex 3Dimentional surfaces.But without any doubts, the most important technology recently created is the 3D rendering &simulation model, being the relational Building Information Modeling (BIM),28 systemreleased in 2005 under the name of Revit Architecture, the most popular in the marketplace.This technology has touch the mainstream only in some developed countries, but willprobably become a worldwide standard in the next two to three years, same as AutoCAD was.From the project management point of view, the globalization process of the world’seconomy that came together with the evolution of the Internet during the mid-1990s, shapednew geographical boundaries. During the past few years, development teams increasinglybecame more remote generating a major change in the projects dynamics, its teams, and thusthe way to be managed. As a consequence, the project management started to evolve intomore collaborative processes. Big companies such as Boeing or IBM, started to adopt the firstgroupware commercial products, using electronic meeting systems to leverage key internalprojects. This phenomenon has created a need for new tools to address the gaps that emerged.Collaborative software (also known as groupware or group support systems) is a technologydesigned to help people involved in a common task achieve their goals. Several Collaborativeproject management tools (CPMT) are being developed to cover all detailed aspects ofcollaboration activities and management of the overall project and its related knowledgeareas. CPMT mostly considers business or corporate related goals with some kind of socialboundaries most commonly used for project management. Collaborative Management Toolsfacilitate to manage group activities, using several tools such as Electronic calendars, Projectmanagement systems, Workflow systems, Knowledge management, Prediction markets,Extranet systems, Social software, Online spreadsheets, Online artwork proofing, feedback,review and approval tool, HR and equipment management, Time and cost management,Online chat, Instant messaging, Telephony, Videoconferencing, Web conferencing, Dataconferencing, Application sharing, Electronic meeting systems (EMS), Synchronousconferencing, E-mail, Faxing, voice mail, Wikis, Web publishing, Revision control, Charting,27 Autodesk, Source: http://en.wikipedia.org/wiki/Autodesk28 Building Information Modeling (BIM), Source: http://en.wikipedia.org/wiki/Building_Information_Modeling32 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Document versioning, Document retention, Document sharing, Document repository,Evaluation and survey, and more.29 304.3.6 Information Trends & ChallengesThe property industry lifecycle includes planning, development, design, construction,operation and maintenance of facilities. The disciplines involved include developers,architects, engineers, telecommunication companies, and local governments, just to mentionsome participants. There are many specific software applications for architectural design,structural engineering, civil engineering, land development, geospatial, and surveyingapplications. Historically each discipline remained isolated from the rest and kept its ownisland of technology and information. As a result of this, often logistics turned into anightmare and operating costs became a major concern to owners, managers and operatorsreaching 90% of the facility cost over its life period. However, whether we are developing abuilding or a hard infrastructure project, the lifecycle is being compressed.These disciplines are classic information islands of comprised of data. The biggest challengeis not getting the data that already exists, but having the appropriate access to these islandsthat make it very difficult to integrate the existing information. As an example, when anemergency occurs, the rescuers need immediate availability to information regarding how thebuilding works, in terms of interiors, surroundings, access, telecommunications, etc. Currentlythere are no applications that enable access to all design and geospatial necessary files to dealwith an urgent situation.29 Collaborative Software, Source: http://en.wikipedia.org/wiki/Collaborative_software30 Interoperability, Source: http://en.wikipedia.org/wiki/Interoperability33 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • The utility companies are facing similar challenges worldwide when they need to analyze thedata flowing within teams. Operators use CAD applications systems, large-format printings,GIS tools and databases to record the documentations and operations. The information flowresult usually is very inefficient characterized by data redundancy, redundant processes, andpoor data quality.A study run by The National Institute of Standards and Technology (NIST) trying to quantifythe efficiency in the capital facilities industry in America, showed redundant paper recordsacross the entire facility life-cycle. The research on interoperability issues including design,engineering, facility management, and business processes software systems estimated in$15.8 billion as inefficient capital facilities cost. The NIST estimated that over 60% of thisamount is directly related to operation and maintenance by owners and operators.4.3.7 Workforce Trends & ChallengesThe contraction of the workforce is a worldwide phenomenon. Statistics predict that countrieslike Canada, Germany, Italy, the UK, the US, Japan, and China will face difficulties toreplace workforce going on retirement with the new generation. Declination of labor forcebetween 34 and 44 years old is predicted to reach an 8% to 21% range of between 2010 and2016 especially in developed countries, according to "Managing the Mature Workforce"Conference Board study. In addition, workers aged 55 to 64 are expected to increase up to52%.A study from the American Public Power Association (APPA) has recently reported that theloss of critical knowledge and the inability to find skilful replacements are the biggestchallenges facing this industry. The organization declared that the average age of workers isnear to 50 and by the year 2010, 60% of the current experienced workers will retire.34 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • A report by the U.S. Department of Labor Employment and Training Administration (ETA)showed in 2004 that the construction industry is also experiencing a shortage of workersidentifying several challenges including the main two trends: the growth of the industry, andthe retirement of the “baby boomers". The workforce contraction problem affects utilities aswell as the construction industry. In addition to this, in a recent survey of career trends in theU.S., a career in construction ranked 248th out of a possible 250 career choices.4.3.8 Productivity Trends & ChallengesThe competition within the construction industry is very high, and companies must constantlyimprove their performances to remain in the market. This challenge of continual productivityimprovement is reaching critical proportions. The US Bureau of Labor Statistics showed thatperformances of the construction industry have declined in the last 40 years, together with a200% growth of non-farm productivity in the same period.35 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 4.4 PEST Analysis for External Environmental ExaminationAn environmental examination has been carried out, analyzing the main variables affectingeach of the areas of the Property Industry Environment where the company participates.4.4.1 Political Environment4.4.1.1 Increased Participation of Governments – G20 • G20 Stimulus o Political efforts towards economic stimulus • Political actions towards stimulation of infrastructure developments • Increasing Political Response on Climate Change Regulation o World Green Building Council o United Nations Principles for Responsible Investments (UNPRI) o Clinton Foundation Climate Initiatives • Increased regulatory environments o Mandatory trading carbon schemes o Green building councils o Green challenges: Focus on increase collar of workers, Focus on retrofitting, Increase sustainability standards, Thumb up for green technology. • Tax incentives for Pharmaceutical Industry o US, Singapore – Puerto Rico • Stimulus on Public Private Partnerships Models 31(PPPs) as preferred mechanism o Australia, US, Canada, China. Not very strong in the UK. • Current- urgency to let projects out o Future- privatization trends to rebalance budgets • Trends o towards energy and water (alternative energies) o Big urban redevelopment (Australia, UK, China) o Emerging countries4.4.2 Economical Environment4.4.2.1 G20 Economic Stimulus • UK- tax incentives to encourage energy efficiency and low carbon growth o $750 Millions - industrial incentives o $250 Millions - education incentives31 Private Public Partnerships (PPPs) Model,Source: http://en.wikipedia.org/wiki/Public%E2%80%93private_partnership36 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • o $70 Billions / annually – 10 years period • Australia o Total incentive $54 Billions o $3 Billion healthcare o Federal desire to privatize health • US- Obamas Huge Stimulus Package o $790 Billion total o $130 Billion to infrastructure and construction o $28 Billion social infrastructure (health and education) o Focus on refurbishment & Green building4.4.2.2 Global Property Market Conditions o After Global Financial Crisis, markets remain very challenging o Affected market conditions o Bonding and insure markets still tight o $1.4 Trillion commercial real estate loans 2010-2014 responsibilities o Threads to American economy o UK ↓--- very low confidence o Europe ↓ o US residential commercial retail ↓ o US Social infrastructure ↑ o ↑ Asia → China, Singapore, emerging countries: India, Thailand, Malaysia o Australia ↑--- extremely strong o Dubai ↓ --- no signs of recovery o Middle East ↔ very low confidence o Singapore ↑ o Emerging countries ↑- Brazil, Mexico, India, Russia o Other countries growing: Chile (economic laboratory), Central America (Costa Rica stability), Nord Africa & South Africa4.4.2.3 Transaction activities ↓ decreasing o Commercial real estate markets frozen o Residential markets in US & UK 70% less since 2006 o Residential markets in AU ↑37 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 4.4.2.4 Investor Stage of the Property Cycle o ↑ Competitive environment o ↑ pressure on pricing o ↓ direct negotiations o Decrease on margins o Liquidity, a lot of opportunities for good deals due to slow market o ↓ New projects in the US, Europe, Africa and Middle East o Competitors struggling o Competitors selling o ↑ Super annuation funds under management4.4.2.5 Market Trends o A- REITs de-risking (AU) o Development decreasing activities (passive market) o Residential markets ↑ (AU) o Retail sales slow o Pharmaceutical Sector – US, Singapore ↑ o Investments in green R&D ↑ o Sustainable Business markets ↑ o Sustainable refurbishment market ↑4.4.3 Social Environment4.4.3.1 Climate change cultural shifts o Environmental imperative perception o Green awareness o World Green councils o Discussions on sustainability ↑ o Agenda on sustainability o Organizations, Contractors & clients within the industry o Corporations giving sustainable reports due to social pressure o Pressure on new Triple bottom line Assessments (Not only financial)4.4.3.2 Demographics o Global population ↑ o Urban population ↑ o Aging population ↑38 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • o Retiring population ↑ (baby-boomer generation) o Generation Y revolution4.4.3.3 Personal Income ↑ (Developing Economies Growth) o Demand for quality products and services ↑4.4.3.4 Workforce o Global market crisis layoffs o Labor force quality and security ↓ o Global downsizing o Construction industry global unemployment: 24,9 %4.4.3.5 Major Social Events o World Expo 2010, China o World Cup Soccer 2010, South Africa o Olympic games 2012, London4.4.3.6 Information & Communication Revolution o Collaboration evolution o Organizations reaching new ways of collaboration & teamwork. o 24 organizations + "Architecture 2030" asking congress to update building codes to meet energy reduction standards o Energy reduction audits & benchmarking o Industry Organizations moving towards collaboration ENVI, BSRIA, COMIT, ECBP, IMPRESS4.4.4 Technological Environment4.4.4.1 Communication Revolution o New Network of Connectivity o Autodesk – Labs & Collaboration o Building Information Modeling (BIM) 1st 100% BIM generated Building o Collaborative Project Management (CPM) o Interoperability (Public Safety) o Automation technology39 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 4.4.4.2 Sustainability o Still high Advocacy & Research but low Commercialization o R&D in Energy ↑ o Testing Rapid Energy Modeling Systems o New Measuring systems "BREAM"4.4.4.3 Technological advancement in new materials o Technology developments in: o Advance materials o Bioscience & healthcare o Design, engineering & advanced manufactured products o Electronics & photonics o Information & communication technology o Sustainable production & consumption4.4.4.4 Active R&D Organizations o CASE Organization (SOM), ISC Project, AVANTI Project, Building Off-Site Project, BRERFID, STRATEGIC RISK, VALID, NGCC4.4.5 Physical Environment4.4.5.1 Physical Interventions and Renovations o 80% of existing buildings in 2010 will exist in 202040 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 4.5 Porter Five Forces Analysis OverviewThe World Construction Industry has been deeply affected by the Global Financial Crisis.Since September 2008, the world has witnessed the fall of the Stock Markets, failure of thebanking system, and a massive amount of bailouts. This uncertain environment has delayedand cancelled projects worldwide at a rate that has no precedent. In addition, headlinescontinue to report negative outcomes in the United States, Europe and the Middle Eastcountries, and raising the alarm of declining confidence. Most sectors of the industry arefacing their most severe downturn in more than twenty-five years, after an extended period ofeconomic growth and prosperity.The mentioned factors have dramatically shifted the forces affecting the industry in the lastthree years. While some of them might be seen as temporal variations due to the currentmarket conditions, others will re-shape the future of the industry in the years to come.Comparing the industry in 2007 with 2010, today we can find a decreasing threat of newentrants, where new competitors have lost the attractiveness or incentives to enter theindustry. There is a decreased bargain power of suppliers, where contractors have lost theability to put pressure on customers. On the other hand, there are increasing threats ofsubstitute products, thanks to an availability of suppliers of property and constructionservices. An increasing bargain power of buyers is the result of an increased ability ofcustomers to put pressure on the industry participants. Finally, a remarkable increase incompetitive rivalry is the consequence of ferocity of a distressed competition with poorpipelines, anxious to get some of the fewer projects available in the market. These changingdynamics between the industry stakeholders (contractors, competitors and customers), lead toa drastic change in the competitive environment, bringing uncertainty to the industry.Although this has been a worldwide phenomenon affecting most industries and markets of theglobal economy, both the Real Estate and the construction industries have been probably themost affected ones. The main reasons for this crisis were the increase speculativeenvironment, the growth in the commodities prices, and the collapse of the banking systemtogether with the subprime crisis, which produced a universal loss of confidence. The fact thatin any economic downturn affecting the global economy, the first being damaged willprobably be the property industry might be related both to its high productivity and itsworkforce generation capacity.3232 See appendix. FMI Management Consulting-Investment banking for the construction industry.Construction Industry Strategic Survey 2009, “Strategy in the eye of the Storm”, Exhibit 1.Source: http://www.fminet.com/article/58741 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Surveys have been done to analyze the real impact of the current economic downturn and howit has affected to participants. A survey presented by the FMI at begging of 2010 has shownthe following results:More than 50% expressed that the economic scenario facing the industry during 2009, 2010,and 2011 was most likely be the one called “On Edge”, referring to slow growth in a fewsectors while others languish. Only 14% believed in a near-term recovery of any sort. Inaddition, 91% is expecting increased uncertainty, differing as to whether the potentialscenarios may come to an end, while 53% are anticipating a range of possible futures, withoutensuring the ultimate outcome.33On another survey regarding the expected impact of the current market conditions on thecompanies of the construction industry, 73% of participants has anticipated a decrease in thesize of their workforce in 2009 & 2010, while only 11 percent anticipate any sort of increase.Also, 74% have increased their business development efforts in the last six months, 57% offirms are only "somewhat confident" in their strategy, while 10% are experiencing a deeperlack of confidence.A survey about the most common strategies followed by companies in 2010 compared to 3-5years ago, the highest rates of answers included an increase in workforce downsizing, projectexecution efficiency, and general uncertainty, weather diversification, better penetration ofcurrent markets and growth by acquisition appeared far behind, showing an importantdecrease compared to strategies adopted before 2007.34In terms of the profitability, a survey has shown signals of the impact of the economicmeltdown on their firms’ balances in 2009 & 2010. Over 77% has anticipated a decrease inprofitability.Finally, on a survey measuring competition in the market, 84% mentioned an increase incompetition in their primary sectors, while 80% indentified there is a lower pricing effect asthe primary response to the current market conditions. As few as 30% have expressed theyhave a detailed understanding of the strategies and competitive advantages of the competition,while only 29% said they are actively evaluating the competition. The survey revealed thatmost of the companies remain focus on delivering the same services to the same customersthey had in the past, while diversification among customers, markets and geographies are stillcommon, but less prevalent.33 See appendix. Idem 6 Exhibit 6, Source: http://www.fminet.com/article/58734 See appendix. Idem 6 Exhibit 15, Source: http://www.fminet.com/article/58742 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 4.5.1 About Lend Lease CorporationLend Lease Corporation is one of the global leader providers of fully integrated propertysolutions throughout the entire property value chain. Where the company operates, there isnot only one competition segment, or a clear competitor to focus on. The firm identifies as itscompetitors a very complex group of forces mainly including medium and large companiesoperating from end to end the different sectors and locations of the entire property valuechain.Lend Lease Corporation considers itself mainly and first as a “developer”, looking to addvalue to the assets which creates. The company considers its value chain and valueproposition as their most important competitive advantage. They believe their success isbased on the integration of their core capabilities. This allows them to maintain its leadershipin an industry they recognize as a very complex scenario, where a significant number ofparticipants competing for a “red ocean” of opportunities. Lend Lease Corporation stronglybelieves that their “blue ocean” strategy lies on their capacity of reaching excellencethroughout all these core competencies as an “active” value creator.Only as a way to simplify and exemplify the main forces operating in each of the sectors, wecan identify “by name” a few of the main competitors on each sector. However, there arecurrently no competitors offering such an extended value proportion as Lend LeaseCorporation.43 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 4.5.2 Global Competition OverviewA. Project Management & Construction Management Industry Construction Companies Worldwide 35 1. Turner Construction (US) 2. Skanska Inc. (EU) 3. Vinci PLC (EU) 4. Hunt Inc. (AU) 5. Leighton Holdings Inc. (AU)B. Property Development Industry Developers in Australia, Asia, UK, US, CEMEA (C. Europe, M. East & Americas) 1. Blue green Communities, Florida (US) 2. Hines Group (US) 3. IRSA (Argentina) 4. Sino Group (HK) 5. The Irvine Company, California (US) 6. DLF Universal (IN) 7. Cheung Kong Holdings (CH) 8. Olympia & York (CA) 9. Tishman & Speyer Properties (US) 10. The Trump Organization (US) 11. Emmar Developers (UAE)C. Architecture & Design Architectural & Design firms in Australia.36 1. Woods Bagot (AU) 2. PTW Architects (formerly Peddle Thorp & Walker) (AU) 3. BVN Architecture (AU)35 Top 50 global construction companies,Source: http://enr.construction.com/people/toplists/topGlobalcont/topglobalCont_1-50.asphttp://no1construction.com/No1Data.htm36 List of Architectural firms in Australia. Source: http://en.wikipedia.org/wiki/Category:Architecture_firms_of_Australia44 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Architectural Services Companies Worldwide 37 38 39 40 1. SOM. Skidmore, Owings & Merrill LLP (US) 2. Gensler Architects (US) 3. Frank Gehry Architects (US) 4. Norman Foster Architects (UK) 5. Renzo Piano Building Workshop (IT) 6. Ateliers Jean Nouvel (FR) 7. Richard Rogers Architects (UK)D. Assets & Property Management REITs – Real Estate Investment Trusts in the US. 41 1. Lexington Corporate Property Trust (US) 2. Brookfield Properties Corporation (US) 3. Equity One Inc. (US) A-REITs – Real Estate Investment Trusts in Australia. 42 1. Westfield Group (AU) 2. Stockland (AU)E. Asset Management Companies in Australia 1. The GPT GROUP (AU) 2. ING Inc. Real Estate (AU) 3. Brookfield Asset Management Inc. (CA)37 List of Architectural firms worldwide. Source: http://en.wikipedia.org/wiki/List_of_architecture_firms38 Idem 6. Source: http://www.architecture-page.com/go/architecture-category/design-architecture-firms39 Architectural firms in the US. Source: http://archrecord.construction.com/practice/top150/0706top150.asp40 Idem 8. Source: http://www.archdaily.com/23244/top-architecture-firms-ranking/41 List of REIT in the US. Source: http://en.wikipedia.org/wiki/List_of_public_REITs_in_the_United_States42 List of A-REIT in Australia, Source: http://en.wikipedia.org/wiki/Australian_real_estate_investment_trust45 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.1 Internal Strategic Analysis5.1.1 Corporate VisionLend Lease’s vision is to be the leading international property company. It was born out ofthe vision to create a company that could successfully combine four disciplines; property,financing, development and investment.5.1.2 Corporate CultureAmong Lend Lease main concerns, becoming a sustainable company is a priority value.Building these foundations has been an integral part of their culture, considering that everysingle action places it closer to this goal. As they express as a core value, "we believe everyaction adds up".In addition to this, the company has created a commitment to deliver a new generation ofsustainable property solutions, focusing in design and investment in new technologies.Finally, the philosophy of being globally Incident & Injury Free has reached every part of thecompanys operations and extended to the whole organization including the employees,partners, clients, suppliers and subcontractors.5.1.3 Corporate Core ValuesRespect – the ideas, cultures, views, knowledge, and health & safety of people.Integrity: not compromise safety within the organization, or in doing business with clients orsuppliers as well.Innovation: finding better solutions, and "out of the box" thinking.Collaboration: sharing knowledge and building on it to drawing insights through teamwork,truly taking the time to help employees.Excellence: Striving for excellence in every step, not only in the products and servicesdelivered, but the way they are delivered. On construction sites in particular, excellenceequals zero incidents.Trust: Transparency and accountability to achieve the business goals. Building internal trustedrelationships as the way to earn the trust of shareholders, partners and the communities inwhich the company operates.46 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • The Companys Code of Conduct, endorsed by the Board of Directors, sets the standards andexpectations in the conduct of its operations. The code supports the group’s Core Values,which links these values to more specific global, regional and local business policies.5.1.4 Corporate Value PropositionThe company has developed over the years a simple but strong value proposition. It is anintegrated property model and strategy that allows them to see more value in property thanmany other participants in the market, thanks to capabilities that span through the entire valuechain, covering the origination of the opportunity through the delivery of the outcomes.Approach: The Lend Lease approach is based on the generation of multiple earningopportunities throughout the end-to-end property solutions they provide combined with astrong partnering strategy and diverse project pipeline, allowing the company to maximizereturns.Core Competency: Lend Lease has developed a unique asset creation capability thanks tofully integrated capabilities extended all over the property value chain.Agility and flexibility: The group market presence since 1958 has given a wide expertise onhow to maximize opportunities and growth through market cycles. They have created amodel, which is flexible and agile, allowing the group to respond quickly at each stage of theproperty cycle.Knowledge and Experience: The Company’s ability to attract the most talented people,combined with deep market knowledge, is the base for long-term earning potential.Innovation: The group commitment to providing leadership in innovation solutions is the keyto ensure the highest optimization of value over the long-term.5.1.5 Corporate GoalsThe companys main goal is to be a global sustainable leader.The approach to reach this goal requires that each Business Units understand the Lend Leaseglobal aspirations and transforms them into plans that fit their diverse market conditions andtheir ecosystems and business operations as well.The companys targets and priorities not only should reflect their engagement with thestakeholders but also respond to the rapidly changing regulatory conditions across the globe.47 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.1.6 Corporate Structure5.1.6.1 Subsidiaries & Acquisitions Actus Lend Lease Public/Private Community Developments US Military Housing facilities Bovis Lend Lease Construction & Project Management Crosby Lend Lease 80 years-old House Builder (UK) Delfin Lend Lease Developer of Urban Communities (Australia) Lend Lease Shopping Centers Bluewater (UK) Catalyst Lend Lease PPPs (Public Private Partnership) In Education, Healthcare, Waste Management & Accommodations Vita Lend Lease Real Estate Management Services Vivas Lend Lease Real Estate Development & Property Management Lend Lease Ventures Venture Capital (focused in Clean Technologies & Renewable Energies) Lend Lease Prime Life Senior Living Communities (Owning, Operation & Development)5.1.6.2 Corporate Organization Chart (see appendix) Executive Office • C.E.O. – Chief Executive Officer – Manager Director • C.O.O. – Chief Operating Officer • C.E.O. – Investment Management • C.F.O. – Chief Financial Officer Corporate Center • Communications • Group Finance48 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • • Human Resources • Incident & Injury Free • Information Technology • Legal • Risk • Strategy / M & A • Sustainability Senior Operational Management Project Management, Construction & PFI Companies: Bovis Lend Lease, Catalyst Lend Lease, Lend Lease Design, Lend Lease Project, Vita Lend Lease. • C.E.O. – Project Management & Construction • C.E.O. – Americas • C.E.O. – Asia & Pacific • C.E.O. – UK • C.E.O. – Continental Europe & Middle East Retail & Communities Companies: Lend Lease Retail, Lend Lease Communities, Lend Lease Development, Delfin Lend Lease, Actus Lend Lease, Crosby Lend Lease. Operations: UK, US, Asia & Pacific Investment Management Company: Lend Lease Investment Management • C.O.O. – Chief Operating Officer • C.I.O. – Chief Investment Officer5.1.6.3 Corporate Leadership & Key People • David Crawford, Chairman • Steve McCann, CEO and Managing Director • Rod Leaver, CEO Lend Lease Australia • Eng-Peng Ooi, CEO Lend Lease Asia • Bob McNamara, CEO Lend Lease Americas49 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • • Dan Labbad, CEO Lend Lease EMEA • David Hutton, Global Head of Centres of Excellence • Scott Charlton, Director of Operations • Tony Lombardo, Global Head of Strategy & M&A • Scott Farqhuar, CIO5.1.6.4 Board of DirectorsA.O. Chairman (Non Executive), D A Crawford, Age 65Mr. Crawford joined the Board in 2001 and appointed Chairman in 2003. He was previouslythe National Chairman of the Australian firm of KPMG. He has extensive accounting andbusiness experience having worked with many large corporations and governments. He holdsa Bachelor of Commerce & Bachelor of Laws from the University of Melbourne. He is aFellow of the Institute of Chartered Accountants.S.B. McCann Managing Director (Executive), Age 44Mr. McCann became Managing Director in 2009 he being appointed Chief Executive Officer.Prior to this, he was the Group Finance Director and Chief Executive Officer for LendLease’s Investment Management business. He has more than 15 years experience ininvestment banking, property funds management and capital. Prior to joining Lend Lease, hewas at ABN AMRO, where his roles included Head of Property, Head of Industrial Mergers& Acquisitions and Head of Equity Capital Markets for Australia and New Zealand. He alsopracticed as a mergers and acquisitions lawyer at Freehills, Melbourne and worked in aChartered Accounting firm in taxation for four years. He holds a Bachelor of Economics(Finance major) & a Bachelor of Laws from Monash University in Melbourne, Australia.(For the rest of the Board of Directors see appendix)5.1.7 StakeholdersThe Lend Lease Corporation was built around the value of creating a community of interestbetween all stakeholders, both internal and external. The companys stakeholders are diverse.They include employees, clients, lenders, suppliers, shareholders, governments, regulators,investors and competitors, as well as the broader communities in which the companyoperates.50 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.1.8 Strategic Business RelationshipsLend Lease Corporation has a history of building successful partnerships based on trust andmutual understanding. The company has strong credentials as a sponsor, partner, financier,designer, developer, and manager, operating in many promising markets around the world.Recognized as one of the leading integrated property solution providers, LLC is one of themajor participants in Public-Private Partnerships worldwide, being this one of the key marketsfor the group. The company brings all elements and participants together to deliver enduringpublic assets and partnerships; it is a trusted guardian of public assets and investments;provides flexible capital solutions at the lowest cost; creates innovative and sustainablesolutions; leads in managing and constructing high quality public assets; sustains andmanages the value and purpose of assets and investments over the long term.Some of the partners include:AENA (Spanish Airports Authority), APG (The Netherlands), ARIA, Australian Federal andState Governments, Australian Prime Property Fund, BP Retail, British Land, CatholicArchdiocese of Sydney, City Developments Limited, Duke University, Fortius FundsManagement, GIC Real Estate, Grosvenor Group, HCA, Health Super, Host PlusSuperannuation Fund, Kerry Properties, Kuwait Finance House, Lancashire County Council,Land Securities, Lonza Biologics, Major global financial institutions, McDonald’s, MeltonEast Land Trust, Merck & Co., Inc., Nakheel, New York-Presbyterian Hospital, NorthumbriaHealthcare, NHS Foundation Trust, Pappas Properties, Inc., PGGM (The Netherlands),Prudential UK, Qatari Diar Real Estate Investment Company, Simon Property Group,Stanhope, Suncorp, Sydney Airport Corporation, Sydney Harbour Foreshore Authority,Telefonica S.A., Telstra Super, The Clarett Group, The Roads and Transport Authority Dubai,The University of Sheffield, United Kingdom National and Local Governments, United StatesDepartment of Defense, Victorian Funds Management Corporation.51 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.1.9 Business SegmentsLend Lease Corporation business segments comprise five different consolidated entitiesdefined in the companys Annual Report including: 1) Retail, 2) Communities, 3) PublicPrivate Partnerships, 4) Investment Management, 5) Project Management & Construction.The first business segment is Retail. It involves all the commercial property developmentsfrom conceptual inception, through all the processes involving the design, planning,construction, financing, leasing, property management and eventually the sale. The RetailAsset Investments are also a part of this segment.The second business unit is Communities. This business involves all types of urbancommunity developments. The main aspects are acquisitions, master planning & design,development and management of the projects. Sales are also included in this segment.The third is one of the most complex and successful segments: Public Private Partnerships(PPPs). This segment includes the privatization services, including health, education, andwaste projects, and the defense estates and accommodation sector.The fourth is the Investment Management business, which is related to the management ofinvestment funds and associated debt on behalf of real estate clients. The indirect investmentsin the real estate market and other markets are also part of this segment.Finally, the Project Management and Construction is the last segment, and this is probably themost important for Lend Lease. This business comprises all the project management, designservices, construction management and engineering activities.Each of this business has different implications and impacts on the performance of thecompany.43 The main products and services revenue producers are the worldwide projectmanagement & construction management services (P.M. & C.M.), of which Bovis LendLease generates over 40% of the companys operation revenues. The communitydevelopments comes in the second position with 21% of the revenues, while Private PublicPartnerships (PPPs) projects produce 18% and the Retail ownerships, developments, andproperty management business unit raise 14% of the firms total revenues. Finally, theinvestment management business unit collaborates only 7% in the companys balance sheets.The small share of the investment management business units in the company’s operatingrevenues shows how the company defines itself clearly as an "active" developer than a"passive" property and/or investment management firm.43 Lend Lease 2009 Annual Report, Segment Summary.Source: http://www.lendlease.com/LLC_Annualrep/2009/segment_summary.html52 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • The business units’ list in order of profitability: 44Project Management & Construction • Project Management & Construction Management Services • Bovis Lend Lease, Design Lend Lease • 40% of the firm Operating Revenue • UK, Europe, Middle East, Americas, Asia PacificCommunities • Lend Lease Developments: Delfin, Vita, Vivas, and PrimeLife. • Urban communities, inner city apartments & senior living • 21% of the firm Operating Revenue • Australia, UK, USPrivate Public Partnerships • Military housing, healthcare, education & waste • Lend Lease Developments, Catalyst Lend Lease • 18% of the firm Operating Revenue • UK, USRetail • Asset ownership, Development & Property management • Lend Lease Shopping Centers, Lend Lease Retail • 14% of the firm Operating Revenue • Australia, Singapore, UK, USInvestment management • Asset ownership, real estate investment management services. • 7% of the firm Operating Revenue • Australia, Singapore, UK, USOn a different approach, the geographic contribution after tax to operating profit of LendLease operations from business units is: 30% Americas, 55% Asia Pacific, and 15% Europe.4544 Lend Lease 2009 Annual Report, Segment Summary.Source: http://www.lendlease.com/LLC_Annualrep/2009/segment_summary.html45 Lend Lease 2009 Annual Report & Geographic implications.Source: http://www.lendlease.com/LLC_Annualrep/2009_Flash/index.htm53 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.1.10 Market OverviewPrivate Organizations • Developers (Residential – Commercial – Offices & Corporate) • REITs (Real Estate Investment Trust)Public Organizations • PPP´s (Private Public Partnerships) • Governments (Ministries & Municipalities) • Heath (Hospitals – Laboratories) • Education (Schools – Universities – Research Centers) • Transportation Agencies & Authorities (Airports & Train stations)Individuals • Rental & buyers (final user / consumer) • Investors & Angels • Citizens (consumers of public spaces)Lend Lease expertise spans a range of sectors including: • Residential • Retail • Commercial • Retirement • Industrial • Heath • Social infrastructure • Education54 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.2 Value Chain Activity System 465.2.1 Primary Activities:Inbound Logistics, Operations, Outbound Logistics, Marketing & Sales, Service ics,5.2.1.1 Inbound LogisticsLend Lease Corporation logistics in the Project Management and Construction Managementare divided into two main different areas: the supply or external logistics and the site orinternal logistics.The supply logistics involves the activities that belong to the production process cycle of abuilding, including the specification of resources such as materials, equipment, and laborforce. The main participants of this supply logistics are the company and the suppliers. Theproject management teams produce information that flows from the sites to the supply chain, informationallowing materials to flow back into the construction sites. They manage the planning,acquisition, transportation, delivery, and storage control, also as a part of the internal logistics,involving suppliers, procurement, factories, and distribution channels. The firm requires fromthe stakeholders to offer a strong customer service area to support the internal and externallogistics and allow a smooth connection between them.The internal logistics include all the on site work the company executes such as substructure, on-siteshell, interiors, services, equipment, and finishing. The owner, the constructor, and the46 Michael Porter, The Value Chain Analysis, Source: http://en.wikipedia.org/wiki/Value_chain ichael55 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • designer define a "triangular relationship" of three main participants. The success of theproject depends upon this relationship, since these actors are responsible for the decisionmaking process and the coordination of the operations. If this relationship is not good enoughit usually affects the final outcome in a negative way. Lend Lease is focused in this particularissue in order to maximize the efficiency and reach an optimal operational excellence. As partof the scope of internal logistics, Bovis Lend Lease has to deal with the management ofHealth & Safety, Procurement, Site Security, Traffic, Administration Offices, SiteHousekeeping, the Environment, Site Waste, Insurance, Information, Personnel, Materials,Site Infrastructure, Tools & Equipment, Maintenance, and Payment systems, among otherissues. 47The operational management team is responsible for designing an effective logisticsmanagement plan, to deal with the five critical areas of planning including personnel, materialflow, schedule adherence, contractor’s organization, and information flow. In addition, theymanage the handling systems, the safety equipment, and the site layout. They define the tasksequence, in order to solve any on-site production problems that might come up also as a partof the internal site logistics.5.2.1.1.2 Consolidation CentersAccording to estimations, delivery logistics in construction represent between 10% and 40%of the workforce time depending on the construction phase. Considering that labor costs isone of the major costs affecting the industrys profitability, the need to develop more effectiveprocesses seems to be a very sensitive issue affecting construction costs. As a way to improvedelivery logistics, some leading companies are adopting "Smart storage delivery techniques".After transforming many industries over the years, these practices are starting to beintroduced in construction.As one of the industry leaders, Lend Lease is operating in several dense metropolitan areasand has to deal with complex environments. In the past few years, the company included aspart of the inbound logistics the Consolidation Center concept. The London ConstructionConsolidation Centre (LCCC) Partnership between Lend Lease, two other companies, andTransport for London, is as an example of a facility that can process over 200,000construction material pallets every year.This external structure provides an innovative supply chain management solution, allowing amore efficient flow of materials and equipment from the suppliers to the construction sites.47 Logistics in Construction: More than Materials, Alan Mossman.Source: http://www.thechangebusiness.co.uk/TCB/Lean_Construction_files/More-than-materials-Construction-Logistics-ECCL.pdf56 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • These centers were developed to provide material handling needs of multiple constructionsites in challenging and crowded locations such as airports and business districts areas.The materials are delivered into the Center during daytime, in the "work-packs" quantitiesonly required for immediate use, following the well known industrial "just in time" approach.The Centers logistic is different than the conventional one in that it follows a one weekmaximum storage approach. The materials are "consolidated", being loaded into a singleshipment, maximizing the distribution processes and efforts, and reducing the overall vehiclenumbers and congestion on these tough environments. Having this new type of stakeholderinvolved in a project becomes a competitive advantage. The differential characteristic is thatgoods are delivered by specialists, straight to the operatives to the exact location, instead ofgetting stuck only to the entrance of a site.Lend Lease advantage in having this express service is that useless labor time is cut, whiledelivery and safety standards are improved. Moreover, LCCC deal with all the externalassociated issues, such as coordination of distributors, access routes, road closures, andpedestrian barriers, ensuring a controlled order over the entire distribution channel. As thiscomplex coordination process is taken out of the equation, contractors and operators are lesspressured on external logistics and more focused on their core tasks (internal logistics)increasing their on-site performance.485.2.1.2 OperationsLend Lease Corporation currently operates in Australia (where its headquarters are located),Asia, the UK, Europe, the Middle East, the United States, and the Americas. The Group hasfive lines of business divided in three geographic regions: Asia Pacific, Europe and theAmericas.49Retail Business Unit includes all the procedures related to property management, assetmanagement and development of retail properties. The Group’s ownership propertyinvestments, including the direct and limited partnerships, are also a part of this business.Communities Business Unit comprises the development of large-scale master-planned urbancommunities, inner city apartments and senior living.Public Private Partnerships (PPPs) Business Unit manages and invests equity in large PPPprojects.48 Source: http://www.constructingexcellence.org.uk/zones/logisticszone/consolidationcentre.jsp49 Source: http://www.bovislendlease.com/llweb/llc/main.nsf/all/fi_finrep_current57 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Investment Management Unit provides real estate investment management services.Investment Management includes the Group’s ownership interests in property investmentsheld indirectly through investments in Lend Lease managed funds.Project Management & Construction Business Unit provides construction, projectmanagement and design services through Bovis Lend Lease (Bovis).5.2.1.3 Outbound Logistics5.2.1.3.1 Waste managementIndustry estimations show that 15% to 20% of the materials that go into a construction site,ended up as waste, producing consumption excess and a huge loss of energy used in theproduction and discard of this resources. These facts made waste management practicesbecome a major element on the industry value chain.50As a major contractor, Lend Lease is leading the race to reach waste management highestperformance of the industry and reporting every step to encourage smaller actors to followthis initiative. The company has published all the aspects of its waste performance. Thereshouldn’t be a competitive reason for the company to share all this information other thantrying to make the industry follow them.The Waste and Resources Action Program (WRAP), developed by the organization forresource efficiency in 2006, rewarded Lend Lease Project Management business unit with agood and best practices for recovery rates on construction sites. The "Best Practice"represents the leading waste management efforts involving a premium cost and significantworkforce practice changes, while the "Good Practice" reflects the state where sufficientwaste quantities make recovery cost efficient, returning a significant value after segregated.In 2006, Lend lease was the main contractor for the refurbishment of an office building at OldBroad Street in London, where the Waste management data were monitored under theresponsibility of four sub-contractors for several weeks, focusing on the site demolition andclearance phases. The waste reports from data collected during the monitored period, includeda weekly average of 144m3 of materials, where 54% was concrete, 31% inert, 9% timber, 5%miscellaneous, and 1% packing. Being the majority of materials collected in skips, most weredominated by one material. Some of the waste was processed on-site for reuse, while the rest50 David Langdon Cost Model for Waste Management,Source: http://www.davislangdon.com/upload/StaticFiles/EME%20Publications/CostModels/CostModel_0410.pdf58 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • was crushed off-site and sold being some materials considered a "quick win" for the project.The overall recovery performance was 95%. The achievement included a 100% recovery ofboth concrete and inert wastes during the site clearance and structural phases, and variableperformance for the rest of all waste, being 50% of the timber waste and 80% ofmiscellaneous waste sent to landfill.51The adoption of this "good practice" strategy to achieve "quick wins" was critical to guaranteethe highest level of waste recovery efficiency. This strategy improved waste segregation andrecovery targets, and ensured the recovery of specific materials. The main benefits of thisinnovative strategy lies on the possibility to monitor the rising process and recovery rates,lowering material and waste disposal costs, reducing the projects environmental impact,improving the companys corporate image, while helping to meet sustainability and deliveringan efficient Site Waste Management Plan.52In addition to the "Good Practice" waste management strategy, Lend Lease has developedProject No Waste (NoW), introduced in 2004 in the UK. The project was a joint efforttogether with Greenfile Developments, the Union of Construction, Allied Trades andTechnicians (UCATT) and the Business Link for London. NoW goal was to skill theirworkforce in order to cut materials wastage and to prevent unnecessary energy consumption.The project initiative includes training operatives on how to work more efficiently with thesite resources, collect and reduce waste, carry out routine facility maintenance, storematerials, improve the work relationships and environment, and deal safety procedures andwith emergencies.535.2.1.3.2 Injury & Safety ProgrammeAs part of Lend Lease vision, one of the company’s main efforts is ensuring the health, safetyand security of its workforce. The firm has a strong policy named “Health and Safety Policy”,where is committed to operate incident & injury free anywhere in the world where they have apresence. They developed a very detailed management plan to effectively manage the securityrules and engage their staff and stakeholders. Available in the company’s website, this policyshows the will for personal commitment, by following the requirements and tools establishedby the company, guarantee the engagement of every stakeholder involved with the firm’sactivities. The Safety Management System is a core part of this policy and includes a clear set51 Source: http://www.carbon-innovation.com/discussion/viewtopic.php?t=702&highlight=&sid=289b36ebe22677297d80a4373f54c8c252 Source: http://www.wasteawareconstruction.org.uk/cases/case2.asp53 Source: http://www.bovislendlease.com/llweb/bll/main.nsf/all/news_20040917bll59 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • of standards that define the requirements and necessary tools to operate all across thecompany’s structure, including the key elements of international health & safety standards. 54Some of these mandatory standards include an education curriculum and training program forall the employees, partners and contractors, a specific job description with detailed safetyroles and responsibilities, an employees’ rewarding criteria to acknowledge their commitmentto the Incident & Injury Free policy, a set of minimum safety physical & operational measuresacross all the Lend Lease activities worldwide, and an online monitoring system to identifyand report major safety risks areas, allow proactive risk management procedures to be takenplace quickly, and share all the lessons learned throughout the organization. This system isconnected to a Safety Dashboard tool to record metrics from the construction sites,empowering the management team to analyze and take actions to improve safetyperformance. Lend Lease Incident & Injury Free vision affects each aspect of the business,from the designs and construction of the buildings to the asset management, engagingpartners, clients and contractors.Regardless all this effort, the company is still experience serious incidents and injuries acrossits global operations, and believes this is unacceptable. Due to its systemic characteristics,many of the issues require a holistic approach to improve systems, processes and controls toreach world-class safety performance. The company is currently developing a SafetyOperational Excellence transformation program, in order to establish a stronger governanceframework to enhance Lend Lease safety culture.The firm’s Corporate Risks Register has categorized Critical, Major, Medium, Small orMinor. This system allows managing and monitoring risks by Health and Safety Engineers,Risk Managers, Business Unit and Senior Executives. During the past three years there hasbeen a significant fall of the Lost Time Injury Frequency rates, which indicates a fewer manhours lost to injury.The leading cause of fatalities across the industry is the “falls of persons”. Within its GlobalMinimum Requirements for Safety, Lend Lease is proactive to mitigate danger while workingat heights. The application of risk control hierarchies are being applied for this type of workto ensure the use of the safest reasonably methods, designed either to eliminate the task or tointroduce efficient perimeter protection and other prevention methods to avoid workforce andmaterials fall.5554 Lend Lease Health & Safety Programme,Source: http://www.lendlease.com/sustainability/index.html#/health-and-safety-detail55 Lend Lease Safety Overview, Source: http://www.lendlease.com/sustainability/index.html#/health-and-safety-overview60 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.2.1.4 Marketing & SalesLend Lease Corporation has adopted over the years several Marketing techniques to markettheir Brands, Services, Products and Projects worldwide. Some of its most used methods areBrand Development, Advertising, Website Design & Implementation56, Public Relations,Public Affairs Management, Media Training, Sales Presentation Development, CommunityRelations Outreach, and National Presence by Securing Speaking Opportunities.57 585.2.1.5 Services & ExpertiseLend Lease Corporation is one of the world’s leaders in providing fully integrated propertysolutions. Its global footprint and deep understanding of property developments and marketcycles for over half a century, enables LLC to achieve unique property outcomes for allstakeholders.Lend Lease capabilities cover the entire property value chain, from the origination of propertyopportunities through to the delivery of great outcomes, offering clients and investors a one-element or an end-to-end solution, aiming to maximize value for all stakeholders at everystage of the property value chain.595.2.1.5.1 Lend Lease Corporation expertise includes:Development Management • Source the best property opportunities. • Structure the right deal.Investment Management • Work with investment partners to fund projects.Project & Construction Management • Deliver development, design and construction.Asset & Property Management • Manage properties enhancing their value over time.Venture Capital Activities • R&D. Research & Development for Innovation & Sustainability. • Investments in commercially viable "Clean Technology" ventures. • Companies operate in energy, water, transportation and building sectors.56 Customer Relations, Source: http://www.nextdigital.com/our-work/clients/vivas-lend-lease/website.aspx57 Lend Lease Marketing Strategies, Source: http://tatianamijalica.com.au/services/marketing-strategies/58 Lend Lease Marketing Methods, Source: http://cohnmarketing.com/lend-lease-communities/59 Lend Lease Capabilities, Source: http://www.bovislendlease.com/llweb/llc/main.nsf/all/ob_pvc61 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • All of these property solutions are based on innovation and sustainability deliveringmaximum benefits to clients, investors and communities.5.2.1.5.2 Bovis Lend Lease Services 60This Subsidiary Company of Lend Lease provides a wide range of services based on aworld-class expertise and experience adapted to its clients requirements. The services can beprovided collectively as an integrated real estate solution offer or delivered on a stand-alonebasis contract type.The company offers a broad range of services, which vary by region: Asia • Construction Management • Design & Construction • Design Management • Environmental Consulting Services & Assessments • Engineering, Procurement & Construction Management (EPCM) • Project Management Australia • Architecture & Urban Design • Building Services Design • Construction Management • Consulting Services • Design & Construction • Multi Site Delivery & Roll Out • Project Management • Sustainable Design • Sustainable Design & Environmental Planning Europe, Middle East & Africa • Project Management • Construction Management • Development Management • Consultancy Services60 Lend Lease Services, Source: http://www.bovislendlease.com/llweb/bll/main.nsf/all/ss_ov62 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Latin America & the Caribbean • Project Management • Construction Management • Development Management • Consultancy Services • Engineering, Procurement & Construction Management (EPCM) (Bovis LL) United States • Construction Management • Program Management • Project Management • Consulting • Design / Build • Owners Representative / Staff Extension • Technical Consulting / Preconstruction UK & Ireland • Construction Management • Consultancy Services • Design • Development Project management • EPCM • Engineering • Management Contracting • PFI / PPP • Preconstruction Consultancy • Programme Management • Project Management • Two Stage Build • Two Stage Design & Build63 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.2.2 Secondary Activities:Procurement, Technology Development, HR Management, Firm Infrastructure5.2.2.1 ProcurementIn order to offer a fully integrated property solution capability and build on its leadershipposition, Lend Lease procurement efforts are as wide as the variety of services the companyprovides. The company procurement capabilities comprise from an electronic procurementincluding electronic catalogues, invoices, and payments (BACS), a long list of distributor andmanufacturer agreements on different Lend Lease business units, an Engineering,Procurement & Construction Management (EPCM) solutions, for sustainability partnershipsto supply with cutting-edge Solar energy technology for the Australian Market.As a way to improve the military housing communities business unit, Actus Lend Leasebrings together over 180 potential vendors including manufacturers, distributors, installers,suppliers and consultants both from the design, environment and energy fields to developstrategic procurement alliance partnerships. Having more than 40,000 homes currently in itsportfolio, Actus manages more than 50 alliance agreements with manufacturers anddistributors only in the United States. Actus strategic procurement alliance partnerships andits Strategic Procurement and Supply Chain Management value are key differentiators. Thecompany understands that its preparation and execution performance can make the differencebetween success and failure.61As an integrated solutions provider, the company delivers Engineering, Procurement &Construction Management (EPCM) solutions. This process includes coordinating the design,structural, mechanical and electrical elements on-site on an ongoing process while works areprogressing in the field. This makes also the procurement process flow smoothly and moreeffectively, and it is only possible due to the full value chain capabilities Lend Leaseprovides. This system allows having only one team responsible for the overall procurementconstruction management on behalf of the client, who usually perceives this as a strongadvantage especially on large complex projects. The EPMC service includes the managementthroughout the various phases of a project including time, cost, safety and quality control.During the construction trade packages are let based on an agreement between the companyand the client previously established during the procurement. Since this process also involvesome important risks for the company, they secure this type of commissions based on a good61 Source: http://www.actuslendlease.com/llweb/all/main.nsf/all/fp_all_alliance64 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • relationship and proven deliver ability in a certain sector and geography. The pharmaceuticalsector in Singapore is probably the best example of successful EPCM delivered by BovisLend Lease.62Historically, the industry has made massive amount of purchases via different methodologies,dealing with different ineffective procurement processes. As one of the largest projectmanagement and construction services providers, Bovis Lend Lease is working on improvingits procurement processes and methodologies. In partnership with the COINS ElectronicTrading Community (COINS-etc) the company is simplifying the control and accountabilityprocesses on-site to drastically reduce inefficient efforts. This new electronic methodologywill make available a straightforward system for anyone at any project site to purchase froman electronic catalogue, ensuring dealing with pre-selected and pre-approved suppliers atpredetermined prices. This large, high profile pilot COINS-etc implementation is focus onfour main areas: electronic catalogue, electronic procurement, electronic invoices, andelectronic payment (BACS). At the pilot site, electronic orders and invoices are already beingprocessed on a trial basis. Lend Lease Head of Procurement Nigel McKay said that, "Basedon what the company has learned so far, electronic invoicing can save more than £250k peryear only in process costs. The implementation of new tools such as COINS-etc will help a lotas part of the firm savings target of £2 million for the 2009-2010 periods in the UK. We areconfident that this system will deliver a huge business benefit for us and will lead toadditional efficiencies and cost savings in the long run." 63As the Project Manager for the London 2012 Olympic Village, Bovis Lend Lease hasestablished a procurement team to deal with suppliers for this specific project. The interestingmodification added to the procurement process for this enormous project is an Outlineregistration procedure. The only method suppliers have to express their interest to becomepart of the projects supply chain is to register on a website (www.villagesupplychain.com).This database allows Bovis Lend Lease teams to contact prospective suppliers and ask themto send further information regarding their capabilities and capacities. If companies have thecapacity to deliver work on many different core trades, separate registration forms should becompleted for each of those trades, remaining on the four years period from inception tocompletion of the projects phase one. In addition, a pre-qualification process called "BuildingConfidence" was developed involving an on-line questionnaire and on-site inspection which62 Source: http://www.bovislendlease.com/llweb/bll/main.nsf/all/ss_asia?OpenDocument&ExpandSection=563 Source: http://www.coins-global.com/cp_root/h/COINS_News/Improving_Procurement_Efficiency/1128/65 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • cost the contractor £3,000. The application forms can also be downloaded on-line (www.http://beta.achilles.com/UK/services/Building+Confidence).645.2.2.1.1 Procurement, the value of StakeholdersLend Lease is permanently working on bringing on board new valuable stakeholders. Thecompany announced a new agreement with First Solar Inc., a leading solar technologyprovider. This company has developed one of the most cost-effective forms of photovoltaic(PV) technology available in the market at the moment. This important new relationship wasestablished to seek leadership in the delivery of sustainable property solutions. The firstcontract signed with First Solar agreed on the supply of 10 megawatts (MW) solar panels, asignificant step forward to provide solar technology not only for Lend Lease projects but alsofor Australia. Lend Lease goal is to leverage this partnership across the firms Australianconstruction business, and its existing development portfolio as well. Bovis Lend Leaseconsiders entering the solar procurement market a strong competitive advantage as well as anamazing potential opportunity for the near future.65As a way to build procurement relationships, Lend Lease permanently participates inconventions and exhibitions. In 2009 for example, the company partnered with Interbuild BSFto connect with the supply chain during its show in October, to create a database of potentialsuppliers for its Public Private Partnership with the Birmingham City Council, to develop 11schools starting August 2010. The company identified some significant gaps, and consideredInterbuild BSF show to be perfect in terms of timing. The project Management firm (Bovis),the developer (Catalyst Lend Lease) and the public partner (the Birmingham City Council)would participate at Interbuild BSF to identify suppliers and innovations, such as heating &cooling technologies. The education sector at Catalyst Lend Lease highlighted the need tolook for innovations they are not aware of.665.2.2.1.2 Procurement, Total Facility ManagementAfter Lend Lease finishes a project, if their strategy includes owning the property to managethe facility, they deal with a whole new procurement process including the maintenance of thebuildings, new materials, new groups of suppliers, and new groups of people involved inmanagement, cleaning, security, service providers staff, and more. Most times the companyhires sub-contractors to deal with all this work. For the Victoria Harbour Development, LendLease contracted Globe Williams International as the Facility Management service provider.64 Source: http://www.bitc.org.uk/resources/case_studies/lend_lease_change_1.html65 Source: http://www.actionsustainability.com/news/172/Lend-Lease-collaborates-with-First-Solar-to-provide-solar-energy-solutions-/66 Source: http://www.hvnplus.co.uk/lend-lease-buys-into-schools-show/3101497.article66 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • The project includes over 100,000m2 of office and retail buildings, high-end apartments and aShopping Centre. The company provides the sub-contractor a set of standards on how tomaintain the facilities. For this development, Globe Williams provided TechnicalMaintenance including Fire Services, HVAC Services, Security and Soft services (Cleaning,Hygiene, gardening and Pest Control) just to name a few. In addition, all the IIF (Incident andInjury Free) standards are to be met by these companies.675.2.2.2 Technology DevelopmentLend Lease recognize the need for a deep transformation in order to deliver changes to thecurrent business practices, achieving process improvements to support a leadership position.The company is aware of the importance of developing smarter systems68. The needs forbetter systems, to help gathering information to assess their environmental and social impacts,monitor and report performance and trends compared to competitors, and understand andmanage risk. Moreover, the requirements to analyze information, build new knowledge,reduce waste and costs, commercialize and capitalize opportunities, and ensurecommunication and efficient information sharing.In the recent years, the firms leadership has focused its energy in educating employees tounderstand that the key to reach smarter systems is based in their interaction. They centeredits attention on the stimulation of the work environment and encouraging their people to becreative, organized and independent by shifting the way they work through smarterinformation and communication technologies. The purpose of these information systems wasto improve the Business Processes and interfaces, improve analysis, reports and performanceindicators, and communication and knowledge sharing.The company has faced the challenge of changing the old problematic and inflexible systemsused for more than 50 years, which consumed a lot of time to administrate and maintain. Themost critical issue was to deal with the inability to process, compare and analyze data. Evenworse were the outcomes when different systems needed to be connected for comparisonpurposes, requiring manual transferring processes that lead to inaccurate data.The situation forced Lend Lease to change the approach and rethink its business processes.Instead of focusing on functionality, they look at the processes as separate components,including capture, allocation, flow, analysis and reporting of data, tasks, and work using thesame metrics, targets and indicators. Using common approaches to master quality control,backup and deliver of data, in more flexible, interconnected, and efficient systems, brought67 Globe Williams International, on Facility Management Services, Source: http://www.globewilliams.com/?p=18768 Lend Lease Sustainability. Source: http://www.lendlease.com/sustainability/index.html#/smarter-systems-detail67 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • together to a single management toolset for better business decision making. The bottom linewas to create a system that provides market intelligence as a competitive advantage, helpingto identify opportunities, achieve excellence across the organization.The automation process allowed, on one hand, to free up employees from inefficient manualprocessing that leaded to frustration, as a way to give them better tasks and keep themengaged and motivated. On the other hand, to capture information from suppliers, from thesupply chain, and from the companys operations in a more organized, systematic, andefficient manner. So far, this change has delivered a more diversified and integratedmanagement reporting roles, a better accessibility to real-time information by the seniormanagers, and a reduction of information costs. The mid-term goal is to develop a fully "ondemand" collection process, provided by this automated data, to feed the whole organizationwith internal and external information sources.The analysis improvement has set standards on how to research and analyze trends, and toreview internal performance, helping to develop a list of key aspects of the business toenhance processes, not only from a functional point of view but for an operational perspectiveacross the entire organization. This process made available a whole series of Financial,People, Health & Safety and Environment information sets to evaluate business segments,sectors, and locations performance comparing and contrasting them at a global level. This isthe base for a new business and market intelligence.Based on these improvements, Reporting and Performance Indicators are also comparedagainst the standard financial statutory reporting enabling the company to create a betterunderstanding of the health of its business. As a result of all this progress, they began toparticipate in voluntary best practice reporting organizations, as a way to continue ahead ofthe legislative curve. Lend Lease is one of the first property companies to be part of the DowJones Sustainability World Index69 and the Carbon Disclosure Project and is working with theGlobal Reporting Initiative (GRI)70 to develop global performance indicators to better assessthe economic, environmental and social impacts produced by the Construction and RealEstate Sectors. The advocacy efforts to lead non-financial reporting, are primarily enabled bythis new approach on how to use Information and Communication Technologies in theindustry. Furthermore, as a global company, Lend Lease performance indicators establish abase for benchmarking and target setting across other industries. Once all these indicators willbe fully running, the company will be more reliable to inform its investors and stakeholders,69 Dow Jones Sustainability World Index, Source: http://www.sustainability-index.com/70 Global Reporting Initiatives™, Source: http://www.globalreporting.org/Home68 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • and contribute on sustainability, not only of the buildings that creates but also of its internalpractices and external impacts.The implications of the changes are shaping Lend Lease IT Communication and knowledge-sharing processes. Knowledge transferring and communication technologies are the key tobenefit from peoples creativity and potential. These systems are the only way to ensureimprovement and multiplication of successful achievements across the organization.Facing the challenges of the industry, the firm considers collaborative intelligence as a criticalaspect for its current and future success. Lend Lease complex global operations demandsmarter solutions71 and flexible physical and digital environments to meet multiple externaland internal communication interactions. These solutions are making possible to work closelywith stakeholders, industry participants, governmental authorities and the community, andempowering sharing initiatives between the employees, the management and the extendedworkers.The most interesting example of Lend Lease communication enhancing efforts is iKonnectservice72. This collaboration and knowledge-sharing system is probably the most unique andeffective of its kind, technically defined as a "facilitated expertise system". The software isavailable to more than 10,000 Lend Lease employees plus countless clients and stakeholdersemployees across six continents,73 and it is based on the firms large experience andobjectives.The fact that it is not database driven is a unique characteristic. The company believesdatabases fail when knowledge needs to be dynamic, and that substantial knowledge restsinside peoples head. Moreover, those databases are limited in scope, supply driven and onlydocument internal knowledge and leaving out the person’s experience, which in this industryin extremely important. They think that knowledge transferring begins with a question andcustomer service is more efficient through conversations because people prefer networks.Lend Lease realized they have a knowledge-management problem. People have documentstorages, and get stuck with the same type of information locking innovation. They knew theyhave to find and alternative solution, a smarter solution. iKonnect service transfersunstructured information, ideas, likes, perceptions, personal feelings, and other types offlexible information impossible to transfer through databases. To date, over 12,000 questionshave been answered and over 3,000 users have been part of the process.71 Lend Lease Sustainability. Source: http://www.lendlease.com/sustainability/index.html#/smarter-systems-detail72 iKonnect System, Source: http://www.knowledgestreet.com/Knowledge_Street_Report_-_BLL_ikonnect.pdf73 iKonnect System platform, Source: http://www.ikonnect.com/69 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Instead of trying to collect all the organizational knowledge in one huge database, the systemstarts with a specific question, as an approach to progress through a set of steps.74 Followedby a facilitator, these steps include 1) Ask a question. 2) Receive the question. 3) Find sharers.4) Validate sharers. 5) Arrange the connection. 7) Seeker makes contact. 8) Resolve andcapture. 9) Detailed follow up, quotes and results sharing.Garry Cullen, a facilitator (matchmaker for knowledge seekers and sharers) in the Australianoffice said that: "the ultimate iKonnect goal is to change employees’ collective behavior sothat they naturally want to ask questions".75 A Lend Lease associate (the seeker), after askinga question said: “The iKonnect service makes it so much easier to pick the brains ofcolleagues in other regions and share valuable information,” she says. “Perhaps the iKonnectteam can help you bust through your bureaucracy.”As a way to improve data collection and information analysis during the pre-design, designand pre-construction processes, Lend Lease has adopted different type of software. AutodeskBIM Software76 is probably the most popular one, collaborating in building the foundationsfor the industry revolution.77 This revolutionary system improves productivity, and increasesthe level of measurement, reducing conflicts and changes during construction.78 The MerckResearch Laboratories Case Study is a very interesting example to see how the company hasalready fully adopted this cutting-edge technology.Lend Lease BIM Case Study: (http://bim.arch.gatech.edu/data/reference_paying/ba06_6.pdf)Bovis Lend Lease has also adopted Autodesk Buzzsaw®, a collaborative project management(CPM) solution, to cut turnaround time for drawing and document production for severalprojects. On the Bridgewater Place project, 11,000 AutoCAD DWF files were stored on thesystem. The system provides a highly compact way to hold information and ensure full use ofthe space available.79 This system is also very useful for the companys Project Development,and Asset & Property Management business segments. 80Another Collaboration system Lend Lease has adopted is the ASITE™ (www.asite.com). Themain benefits in using this Collaboration Service are the easier data storage, the process74 iKonnect System detailed chart, Source: www.kwork.org/locators.html.75 iKonnect System, Source: http://www.knowledgestreet.com/Knowledge_Street_Report_-_BLL_ikonnect.pdf76 Building Information Modeling, Source: http://usa.autodesk.com/company/building-information-modeling77 Lend Lease, BIM Case Study. Source: http://bim.arch.gatech.edu/data/reference_paying/ba06_6.pdf78 The value of BIM, Source: http://images.autodesk.com/adsk/files/final_2009_bim_smartmarket_report.pdf79 Autodesk Buzzsaw® (CPM).Source: http://images.autodesk.com/emea_nw_w_main/files/bovis_lend_lease_customer_story.pdf80 Autodesk® Collaborative Project Management, Source: http://www.autodesk.co.uk/adsk/servlet/pc/item?siteID=452932&id=13059673&linkID=1430356970 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • efficiency savings, the reduction in re-work, and general cost savings, such as paper, postageand couriers. But the most important advantage is the reduction of project risk. 81Attempting to explore innovation in Sustainability at all levels, Lend Lease Core Plus Fund(LLCPF) is innovating beyond building with a new smart software CSIRO trial, developed toreduce energy usage by up to 30% in four of the companys commercial assets. Cate Collins,Lend Lease’s Asia Pacific head of sustainability says that: "Lend Lease see this product as anopportunity to innovate beyond simple building re-tuning, creating ‘smart’ buildingmanagement systems to respond to the changing needs of our tenants and our requirement todeliver sustainable solutions, using real time weather updates to streamline energymanagement".82Another example is the Bovis Lend Lease combined strengths with Meridian Project SystemsInternet Technology looking to improve project teams communication, and increase processefficiency reducing hours and costs. The company applied "Prolog" for the submission andtracking of more than 1,200 RFIs, digital sketches, bid packages, and change managementupdates for a $235 million project for the Four Season Hotels. The use of this informationmanagement system, instead of manhandling paperwork, allowed the workforce to focus onbuilding and forget the office logistics.83Lend Lease in focus on empowering efficient IT technologies. As part of its commitment tobecoming a sustainable organization, Bovis Lend Lease is continually minimizing its carbonemissions impact. The company has deployed NightWatchman® 84for 3,000 PC users acrossits European offices environments. The systems benefit reached a 32% reduction of BovisLend Lease energy consumption target in ten months.855.2.2.3 Human Resources ManagementLend Lease set 5 important goals concerning their human resources managements.5.2.2.3.1 Measuring Employee Engagement. Lend Lease believes it is crucial to keep trackof their employees perceptions and engagement levels. In order to do so, the company haslaunched Global Employee Engagement Survey in September 2009 which has shown verypositive results concerning employee engagement, safety and identification to values. Due tothis positive outcome, the firm continuously works to improve employee communicationsthroughout all levels, by creating an online portal among other initiatives.81 ASITE™ Collaborative System, Source: http://www.asite.com/docs/Case%20Study%20Stanhope.pdf82 CSIRO Technologies, Source: http://www.sustainablebuildingproducts.com.au/news/lend-lease-fund-to-trial-new-csiro-technology83 Internet technology systems, Source: http://www.meridiansystems.com/newsevents/PressReleases/press-Sep_26_01-Bovis.asp84 1E – NightWatchman system, Source: http://www.1e.com/softwareproducts/nightwatchman/index.aspx85 NightWatchman Case Study, Source: http://www.1e.com/download/whitepapers/Bovis_Lend_Lease_CaseStudy.pdf71 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.2.2.3.2 Building on the Diversity of its People. It has been an important priority of thefirm to develop a strategy that will attract, encourage and promote diversity within theworkforce. The introduction of focus groups in 2008 in several countries worldwide is oneway in which they have worked toward this goal. These focus groups had to do with variousgroups in the workplace, including women, older employees, employees with disabilities, andoverall cultural diversity. This was such a success, that now there are Women in theWorkplace Employee Resource Groups in all continents.5.2.2.3.3 Growing and Retaining its Talented People. Lend Lease efforts to provide seniorleaders and high potential employees with personal development and learning opportunities isa key priority to assure the growth of the business and success of the global organization. Thecompany offers Executive Development through leading business schools to ensure technical,leadership and interpersonal skills. Moreover, Mentoring Programs are also provided throughall levels of the organization to leverage the management process. In order to keep growingand retaining our talented people, Lend Lease created a Sustainability Core Skills Programwhich provides the employees with the necessary knowledge and technical skills concerningsustainability issues which has become a crucial matter in contemporary society.5.2.2.3.4 Attracting Young Talent. The Company provides training to young talentedinterns, as well as apprenticeships, to develop and attract the new generation of leaders. Oneexample of these initiatives is the Vacation Intern Program which provides a paid job toundergraduate students relevant to their fields. This program provides various benefits,allowing the interns to learn new skills and create a professional network that will help themsolidify their future career opportunities.5.2.2.3.5 Employee Policies. Lend Lease is an equal opportunity employer as it does notdiscriminate against race, ethnicity, religion, gender, age, or any other factor. All employeesare entitled to a contract, as well as a copy of the code of conduct which lists all of thecompanys policies on issues such as sexual harassment, global privacy, and others.72 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.3 SWOT Analysis for Strategic Planning5.3.1 Strengths General • Strong Brand • Strong Reputation • Global Presence • Core Capabilities & Services • Value Chain & Value Proposition • Global & Local Expertise • Proven Management & Leadership team • Structure Flexibility & collaboration • HR Learning Approaches • Acquisitions • Financial Position • Access to economies of scale (large scale developments) • Sustainability achievements, the company is ahead on experience curve • Project Management Strategy & Growth Strategy • Acquisition approach & strategy • Stakeholder commitment • An acknowledge market leader • Injury and safety performance • Partnerships • Accreditations & certifications • Rankings & Performances • Based in Australia since the 50s, being this its strongest marketshare position and the least affected market by the GFC as well. Project management – "on time" delivery • Blue water, UK • Barangaroo, Sydney • Hawaii community • Athletes village, Olympics London 2012 • Metro Dubai • 313@Somerset, Singapore • Victoria Harbor Urban Redevelopment, Melbourne73 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Sustainability Performance • Well-developed Sustainability Strategy • Portfolio of Achievements o The Gauge o The Bond Portfolio Management • Australian Portfolio ↑ • UK- AU Investment Funds Social Responsibility • The Foundation • Be Onsite Project • Tsunami Reconstruction • Cultural Behavior Market Positioning • Retirement sector • Pharmaceutical • Urban redevelopment • PPPs • Retail & Commercial • Social infrastructure (education & health) • Communities (US & AU) • Lend Lease Design Office (AU) Market Leadership • Project Management & construction • Australian Property Market • Sustainability • Injury & Security Policies • Communities • PPP- Public Private Partnerships Technology & Communications • Processes, Systems & IT communications • iKonnect Communication System74 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • • Building Information Management (BIM) • Collaborative Project Management System • External Research and Development (R&D) Partnerships • Venture Capital Investments in Clean Technology5.3.2 Weaknesses Industry Environment • High Risk as a developer (Main Player) Business • CEMEA (Central Europe, Middle East, America) • Project management • UK, US, Middle East performances Structure • Overhead structure • Upper CEOs structure Legal • New York investigations Market Performances • Residential • Retail & Commercial • Offices Weak Market Positioning • California • China • Japan • Malaysia • Singapore • Brazil, Mexico, India • Central America • North-South Africa Internal Research and Development (R&D) • Internal R&D of Construction Material • Architecture & Urban Design75 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Human Resources Management (HRM) • Employee Motivation System can be improved • Rewarding systems can be improved Operations • Operational Excellence • Operations are good but not great, Still room for improvement Financial • Obligations • Some difficulties to raise capital • Dividend decreasing • Market Share (?) • High costs with less sales = lose of asset value Marketing • Well known in the industry but not globally (?) Standardization • Not fully adapted to BIM-BREAM-LEED Innovation • R&D lack in service consultation • Habitat analysis • Infrastructure • Vehicles • Energy • Engineering technology • Urban design • Architecture • Logistics planning • Biodiversity • Eco-architecture & agro-housing projects • Permaculture &Eco-villages • Agro-Housing Projects • Break conservative position76 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.3.3 Opportunities • Investment stage on the property cycle (ext) • High tech parking market • Interoperability opportunities Economy • Economic stimulus • Benefits due to position • Commercialization of sustainable solutions • Green & Green Refurbish markets growing Market Penetrations Australian • Land acquisitions 2009 will generate a Pipeline for the next 10 years • Urban Redevelopments & Communities • Barangaroo Project • Victoria Harbour Project • Brisbane Project • Retirement communities Australian Real Estate Investment Trust (A-REITs) • Competitors de-risking on development position • Competition selling – weakening China • Australian pavilion _ World Expo 2010, Shanghai China United Kingdom • Athletes Village - Olympics 2012, London Singapore • Expansion to Singapore market through Somerset Project Aging Infrastructure (Industry Challenge) • Will create new markets and reinforce renovations and refurbishment Sustainability • Increase in sustainability standards • Lead the Construction Industry revolution • Emerging new technologies – BIM - CPM (int.) • Improve processes & communication thought technological revolution77 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • • Set standards & become a leader in safety (int.) (ext) • Partnerships with Organization & Governments (ext) • Arch 2030, J.P. Morgan, Goldman Sachs, Wagoon, Autodesk, World Green Councils, Interoperability Organizations • Learning Organization • Ability to transfer knowledge throughout the organization Opportunities in new markets and segments • Aging Opportunities – Retirement Markets • Elderly market pleasure housing • Healthcare necessities + Financial Property Portfolio • Increase passive & active revenues HR Management • Talents Availability due to difficult market conditions • Bovis Lend Lease Integration with Core Capabilities • Increased Bovis Current 20% of "Full Value Chain" Pipeline Projects5.3.4 Threats • Vulnerability to recession and business cycle (Global Economic Crisis) • Declination of confidence & Slow Market Growth • Increasing competition in the market • Growing bargain power of buyers • Growing threat of substitute products • Social Pressure & New Market Demands • Industry facing internal crisis & deep challenges • Productivity ↓ • Workforce ↓ • Island of information • Aging infrastructure5.4 Ansoff Matrix for Product-market Growth AnalysisLend Lease has developed over the years a global footprint along different sectors, diversebusinesses, dissimilar geographies. The firm has exhibit high capacity to exand itself over78 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • new business units taking advantage of the opportunities that have came up thanks to thecompanys active approach, its outstanding performance, and the chaniging market conditions.Using the Ansoff Product-Market Growth Matrix86, as a tool to develop new tactics to growthe business and define what course the company should be taken short and long term giventhe current performance situation. The four different possible combinations have beenanalyzed as a grid, including four strategies to expanding the business through new and/orexisting products and/or markets. The less known the product-market is, greater the risk todevelop that strategy becomes. In other words, considering going into penetration strategiesstands for a more conservation strategic plan than developing new products and/or newbusiness segments.5.4.1 Market Penetration (Existing Markets, Existing Products): • Australia & Asia • UK & Ireland • US & The Caribbean • Central Europe, Middle East & The Americas • Investment Management Services • Investment Funds Products • Project Development Services • Project Management Services • Construction Management Services • Engineering, Architecture & Design Services • Assets & Property Management Services • Residential • Commercial & Retail • Offices & Corporate • Education • Healthcare • Pharmaceutical • Infrastructure • Transportation • Communities • Urban Redevelopment • Senior Living86 Ansoff Product-Market Growth Matrix, Source: http://en.wikipedia.org/wiki/Product-Market_Growth_Matrix79 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.4.2 Market Development (New Markets, Existing Products): • US – Healthcare Sector • China – Retail & Residential Retirement • Japan • Singapore • Europe – defense accommodation programs • UK – Education • Malaysia5.4.3 Product Development (Existing Markets, New Products): • New Investment Funds (Lend Lease-APPF – Australian Prime Property Fund) • New communities – Australia (Delfin Lend Lease) • Senior Living – Australia (PrimeLife Lend Lease) • Urban Regeneration – Australia (LL Developments & LL Projects) • Residential – Australia (Vita Lend Lease) • Commercial & Retail – UK & Australia (LL Retail & LL Developments) • Offices – Australia (LL Developments & LL Projects)5.4.4 Business Diversification (New Markets, New Products): • Green Building & Sustainability worldwide • Green Refreshments & Renovations worldwide with focused in US • Waste, Water & Energy Projects • Commercialization of Venture Capital Investments (Renewable Energy)80 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.5 The BCG – MatrixAn analysis of the company’s position in the market was done using the BCG Matrix ofPositional Modeling. (Based on Lend Lease Corporation 2009 Annual Report 87, which can befound in the appendix), the results include a detailed location of each of Lend Lease businesssegments in the BGC Matrix. This strategic analysis was extremely important in order todevelop a greater comprehension of the competitiveness, the strengths and weaknesses, andthe challenges of each business unit as a way to identify a Global General Strategy.The Market Share Half of the Matrix5.5.1 Cash Flow – Products & Services with High Market Share • Retail Development (US) ++ • Bovis Lend Lease – PM & CM (AU) +++ o Commercial & Retails o Social Infrastructure o Health & Education Sectors • Bovis Lend Lease – PM & CM (AS) o Social Infrastructure o Health & Education Sectors o Telecommunications Sector (Japan) o Commercial & Retail Sectors (Singapore) • Bovis Lend Lease – PM & CM (UK & EU) o Government & Justice Sectors • Bovis Lend Lease – PM & CM (US) o Office & Corporate Sectors o Senior Living Sector • Investment Management (AU) o Lend Lease PrimeLife o APPF Retail Fund o APPF Industrial Fund87 Lend Lease 2009 Annual Report & Geographic implications.Source: http://www.lendlease.com/LLC_Annualrep/2009/index.html81 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.5.2 Dog – Products & Services with low Market Share • Crosby Lend Lease – Residential Development (UK) - - o This business has been deeply affected by the UK Financial Crisis and needs to be redefined. However, it used to be a healthy and profitable business in normal market conditions, which means that there is still room for adaptation and improvement.The Market Growth Half of the Matrix5.5.3 Star – Products & Services with High Market Growth • Retail Development (Asia Pacific) ++ • Primelife - Senior Living Developments (AU) + • Bovis Lend Lease – PM & CM (AU) +++ o Social Infrastructure o Health & Education Sectors • PPPs – Public Private Partnership (UK) ++ o Education, Health & Waste Sectors5.5.4 Problem Child – Products & Services with Low Growth • Retail Development (UK) ++ • Communities & Residential (UK & EU) +++ • Residential (US) ++ • Residential (AU) + o Residential Lots Sales • PPPs – Actus Lend Lease (US) + o 19 projects (See appendix)82 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.6 Porter Generic StrategiesThe Generic Strategies Scheme has been utilized in order to analyze the dimensions of LendLease strategic strengths and scope. This is an attempt to describe how the company hasdeveloped narrow and/or broad strategies, which affects its profitability in terms of reachingcost leadership through a high market share and/or a unique differentiation based focusing ona narrow and very specific market. The analysis seek to describe the firms approach inregards to its market focus, segmentation, and targets, core competencies, productdifferentiation and cost efficiency strategies.Lend Lease Group has focus most of its energies on developing a strong broad differentiationstrategy. This is not a single element based plan, but a product of adding up a multiplestrategy combination to create a dynamic plan to drive the firm, which has adapted itself overthe years to both internal and external conditions. The current economic crisis is a goodexample of its adaptation capacity and flexibility. In addition, in the recent years this plan hasbeen assembled to create a whole global strategic approach which involves a combination ofthe following Market Positioning, Integration, and Intensive Strategies, Diversification andDifferentiation Strategies and Growth Strategies.This combination between market segmentation with product differentiation strategies seemsto be effective in order to matching the supply side (product strategy) to the characteristics ofthe demand side (target market segments). Combinations like differentiation are quite difficultto achieve due to the potential conflict between reduction of costs and the additional cost ofvalue added to reach differentiation. Currently, Cost Leadership Strategies are not the mainfocus of the company. This is the reason why, only some strategies developed to reduce andmaximize costs emerge in this analysis. Yet, strong efforts are being done to improve itsoperation performance looking to reach excellence, both as differentiation and cost advantageattributes.83 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 5.6.1 Differentiation Strategy (Broad Industry Wide) Market Positioning Strategy 1. Strong Branding Strategy 2. Value Proposition Strategy 88 a. Retail, Communities, PPPs, Investments, PM & CM 3. Capital Allocation Strategy 4. Global – Local Collaboration Strategy 5. Integration Strategy a. Vertical integration 89 i. Value Integrated Property Strategy (Value Proposition) b. Horizontal integration i. Value Chain Strategy ii. Acquisitions Strategy iii. Partnerships & Alliances Strategy 6. Intensive Strategies a. Market Penetration b. Market Development c. Product DevelopmentMarket Diversification Strategy 1. PPPs Strategy 2. Retirement Strategy 3. Urban Regenerations Strategy 4. Eco-Communities Strategy 5. Green Market Strategy a. New Developments b. Refurbishment & Renovations 6. Renewable Energies 90Market Differentiation Strategy 1. Value Proposition Strategy 2. Innovation Strategy 3. Sustainability Strategy88 Lend Lease Value Proposition, Source:http://www.lendlease.com/LLC_Annualrep/2009/value_proposition.html89 Lend Lease Integrated Strategy, Source: http://www.lendlease.com/LLC_Annualrep/2009/capabilities.html90 Lend Lease moves into solar, Source: http://www.rechargenews.com/energy/solar/article224900.ece84 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 4. Social Responsibility Strategy 5. Injury & Security Strategy 6. Risk & Time Management Strategy 7. Communication Strategy 8. Collaboration with Regulatory Entities (increase standards barriers) 9. Continual Improvement Strategy 10. Learning Organization Strategy 11. Market Growth Strategy. The Path Forward a. Expansion. Increase Global & International Footprint b. Venture Capital. Next Generation Strategy c.5.6.2 Focus Differentiation (Narrow Market Segments)As part of the broad differentiation strategy, Lend Lease has developed specific strategiestaken in place by its different subsidiaries. Each of the companies is looking to reachingdifferentiation performance to add value to the group.Business Segments 1. Project Management & Construction Strategy a. Retail Sector b. Communities Sector c. Residential Sector d. Offices & Corporate Sector e. Urban Redevelopment f. Green & Green Refurbish Sector g. Social Infrastructure (Education, Health, Pharmaceutical) h. Hard Infrastructure (Water, Treatment Plants) i. Pharmaceutical Sector 2. Retail Development Strategy a. Commercial & Retail Sector 3. Communities Development Strategy a. Senior & Retirement Sector 4. PPPs – Private Public Partnerships Strategy a. Education, Health, Waste & Accommodation Sectors 5. Investment Management Strategy a. Asset & Property Management Strategy85 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Geographies 1. Australian Market 2. Asian Market (Singapore – China – Japan – Malaysia) 3. UK – United Kingdom Market 4. US & The Americas Markets 5. CEMEA Markets (Central Europe, Middle East, Africa)5.6.3 Cost Leadership (Low Cost Broad Industry Wide)Lend Lease is not focused in Cost Leadership strategies or "better price" strategies since thecompany doesn’t believe these are sustainable strategies over time. However, the firm ismaking hard efforts to reaching structure efficiency, operational excellence, and capitalmanagement, which will highly improve Lend Lease competitive standards. 1. Integrated Capabilities Strategy a. Bovis Lend Lease Services b. Value Proposition (Integration to achieve cost advantages) 2. Re-engineering Strategy a. Re-sizing structure 3. Communication Efficiency Strategy a. IT Improvements (maximize resources and decrease costs) 4. Safety Efficiency Strategy a. Injury & Security Policy (decrease fatalities and time costs) 5. Financial Capital Recycling5.6.4 Focus Cost (Narrow – Market Segments)These strategies were developed as a reaction of the current market conditions especially inmost European countries and in the United States. 1. CEMEA Re-sizing structure 2. Defensive Strategy a. European footprint temporal Retrenchment (or resizing) b. Potential Liquidation86 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 6.1 Strategic Development - Lend Lease Strategic Mapping6.1.1 Value Proposition & Business Model StrategyLend Lease Group considers having a strong value proposition, which captures the benefitsfrom an integrated property model.91 This model extracts the maximum value from real estatebusiness, addressing each part of the property life cycle leveraging skills across the entirevalue chain.Lend Lease knows there are no other companies in the industry with such a value proposition,and they consider it as their strongest competitive advantage. There is a very strongcompetition in each of the sectors but no one participates in all of them at the same time. Thisdistinctiveness enables Lend Lease to maximize all possible property returns promotingcooperation across all of their businesses. This model provides multiple revenue streamscoming from Development profits, Development fees, Construction Management (CM) fees,Project Management (PM) fees, Engineering, Construction & Procurement Management(ECPM), design & consultancy fees, Facility Management (FM), Asset Management (AM),and Funds Management fees. In is clear that the large scale urban regeneration projects arewhere the most outstanding outcomes can be achieved.In addition, the business model utilizes third party capital and invests together with itsinvestors, clients, partners or other developers (in some cases governments), both capturingrevenue streams and using a lower amount of capital than competitors as well. Based on thisvalue proposition, execution represents a key aspect of the added value, in order to deliver thehighest possible return on capital in the industry. This integrated approach comprises severalsteps including research (leading investment decisions), origination (accessing to pipelineacross sectors), Product Development (generating innovative product solutions), Debt Raising(leveraging solid banking relationships), Equity Raising (accessing to broad capital globally)and Deal execution (executing quality deals and due diligence).92To ensure the achievement of this "both complex and simple" approach to the business, thefirm has refined its value proposition strategy moving from earnings per share growth to totalshareholder return, and from expanding internationally to consolidating its position inAustralia as home market. The company changed from diversifying into many sectors tofocusing in scale its successful platform. They moved from recycling capital in order toachieve profit, to doing the same as a way to fund growth. And finally, Lend Lease has91 Lend Lease Value Proposition, Source: http://www.lendlease.com/LLC_Annualrep/2009/value_proposition.html92 Lend Lease Integrated Solutions, Source: http://www.Strategy_Rod_Leaver_2009.pdf87 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • maximized these integrated solutions instead of just providing a broad range of propertyservices.93Lend Lease business model has been created around an end-to-end property solution driver.Its purpose is to preserve their key core capabilities: property management, propertydevelopment and construction and funds management. Comparing the model against itscompetitors, most of the other players are focused in passive earnings coming from assetmanagement. On the contrary, Lend Lease is an active developer and asset creator. Comparedto other developers, the companys advantage lays in its in-house capabilities. Measuring itsvalue against contractors (since this field is based on a service) the key is to sustain excellencein all operations and risk management. At last, Funds (such as REITs) are not really part ofthe scheme. Therefore the real key of the model is the capital accessibility, and Lend Leaseunique capabilities facilitate this attraction process.Coming along with its value proposition, the companys model is driven by five corecompetitive advantages. The first one is their integrative approach, based on what has beenmentioned above. The second one is their core competency, positioning them as an activedeveloper focused on asset creation. This position is based on two different components, theirorigination and execution capabilities. The third competitive advantage is both the agility andflexibility. In other words, this is the ability to manage the business through property cyclesprovided by a diversified approach. The key is understanding the cycle to maximize capitalrecycling, make smart decisions, and take advantage of the opportunities. This works alikethroughout the entire value chain. The fourth competitive advantage facilitates that cycleunderstanding. It is Lend Lease global and local expertise that confers valuable knowledge toall their businesses. They key has been the capacity to learn from and share that knowledgetransferring it throughout the organization. This knowledge is leading to the fifth and mostimportant advantage, innovation. Innovation has driven Lend Lease to create a leadershipposition as developer of sustainable property solutions. The firm has more than one thousandskilled professionals in sustainability issues and delivered some of the highest globallycertified green buildings seen up-to-date. And most importantly, based on these ambitions,Lend Lease is leading this trend moving from green advocacy to green commercialization. 9493 Lend Lease Strategies, Source: http://www.Strategy_Steve_McCann_2009.pdf94 Lend Lease Business Model & Competitive Advantages,Source: http://www.lendlease.com.au/llweb/llc/main.nsf/images/Tony_Lombardo.pdf/$file/Tony_Lombardo.pdf88 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Based on its unique business model and integrated value proposition, Lend Lease is ready tocapitalize the industry trends as a group and is strongly positioned all across the propertyvalue chain.956.1.2 Capital Allocation StrategyThe capacity to indentify, gather, allocate and maximize capital is the most importantchallenge for Lend Lease Corporation. As an asset creator, it is all about finding capital,induce investors, and make this capital perform in a successful manner. This cycle representsthe key engine towards the companys growth. Therefore, Lend Lease efforts have beenfocusing in becoming the most proficient capital allocator in the industry. The companysattention is centered in its financial metrics, its capital allocation and its financial position.96The key Financial Metrics are mechanisms used by the company to measure itself. Theseprocedures involve all their corporate targets in terms of returns on equity, gearing, interestcoverage ratio, and annuity income. Each business unit has a different target associated withits margin/yield and its risk adjusted with equity return. As a result, each unit performsdifferent and has a different level of profitability. Consequently, the group has developedstrong Financial Metrics necessary to deal with this complex risk/return equation. Thesemetrics are also essential in order to maintain healthy financial relations with banks, fundsand other capital providers, and the highest possible credit rating as well.Lend Lease capital allocation analysis stands in two major parts: the risk adjusted to capitaland the earnings produced by this same capital. The company analyzes the risks based onthree variables: sectors, geographies and active (investment assets) versus passive (operatingcapital) capital allocation. Lend Lease much diversified earnings base are evaluated from abusiness unit performance point of view. (See BCG Matrix).Since the economic downturn affected the real estate industry, the company has adapted itsintensive strategies (including its market penetration, market & product development, andmarket diversification) to the new market conditions. In terms of capital allocation, futurecapital has been weighted towards Public Private Partnerships, mixed-use projects and urbanredevelopments such as Lend Lease Catalyst initiatives97 for education and healthcare, orLend Lease Development $6 billion Barangaroo (http://www.barangaroo.com) project in95 Lend Lease Strategy, Competitive Advantage Presentation, Source:http://www.bovislendlease.com/llweb/llc/main.nsf/images/pdf_trans_tonylombardo_13may09.pdf/$file/pdf_trans_tonylombardo_13may09.pdf96 Lend Lease Strategy, Capital Allocation & Management. Source:http://www.lendlease.com.au/llweb/llc/main.nsf/images/Brad_Soller.pdf/$file/Brad_Soller.pdf97 Lend Lease Catalyst initiatives. Source: http://www.catalystlendlease.com/89 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Sydney,98 $1.8 billion Victoria Harbour in Melbourne99, and the 2012 Olympics AthleteVillage in London100 (http://www.theathletesvillage.com/page/the-athletes-village). From thegeographic point of view, the company is focusing in Australia as its home market. They arelooking to consolidate its leadership, both as a developer and as an investment manager. Thesecond focus will be Asia, including Singapore, Malaysia, and Japan. China is a specifictarget where the company is looking to increase its footprint.101 Currently, the company isnegotiating to enter this gigantic property market pursing to grow based on its $9.7 billionfund management business. Lend Lease sponsorship to the Australian Pavilion for the 2010World-Expo in Shanghai (http://www.australianpavilion.com), has strongly demonstrated thecompanys interest towards this market. In addition, the company is allocating more resourcesinto the Public Private Partnership space and in Bovis Lend Lease (Project Management andConstruction) business segment, sustained by the G20 economic stimulus package.Among the target allocation and portfolio parameters, the strategy has established that nosector will concentrate more than 30% of the capital. Also, that developed markets willconsume between 80 to 90% of the allocation, while emerging markets only 10 to 20%. Inaddition, Australia no less than 40% and other geographies wont allocate more than 25%.Lend Lease future capital allocation will be directed towards these prioritized segments,projects and locations, including the 2012 London Olympics-Stratford, the PPP Equity Stakes,Delfin Projects, Investment Management & Co-investments positions, and the AustralianOpportunities. The company has more than 30 projects in the pipeline, which shows that thekey is to build a strong capital capacity.For the last variable, the company has established that active earnings will allocate no lessthat 80% (development & construction), while passive earnings will allocate up to 20%(investments & co-investments). This strategy shows its attitude towards the developmentapproach over a passive tactic.Finally, the most significant change in Lend Lease Financial Strengths (see appendix,Financial) is related to the mix between debt and cash. This has happened due to the98 Lend Lease Development, Barangaroo, Sydney. Source:http://www.barangaroo.com/downloads/Media%20releases/Barangaroo_Progress_Report_Dec09.pdf99 Vivas Lend Lease & Lend Lease Development. Victoria Harbour,Source: http://www.vivaslendlease.com.au/content.aspx?urlkey=ns_vicharbourSource: http://www.bovislendlease.com/llweb/llc/main.nsf/all/news_20011212Source: http://www.victoriaharbour.com.au/llweb/victoriaharbour/main.nsf/html/index?opendocumentSource: http://www.bovislendlease.com/llweb/llc/main.nsf/images/pdf_ps_vic_harbour_project.pdf/$file/pdf_ps_vic_harbour_project.pdf100 Lend Lease Development, 2012 Olympic Village.Source: http://www.london2012.com/news/2007/09/olympic-village-legacy-vision-revealed.php101 Lend Lease Efforts in China.Source: http://www.theaustralian.com.au/business/lend-lease-eyes-china-for-property-growth/story-e6frg8zx-122587227647390 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • perceived banking system volatility. This is a very complex issue involving cost of debtmanagement (6% in todays market looks highly competitive) banking-financial covenants,and debt maturities. This type of management requires highly proficient skilled real estatefinancial capabilities, which has been an important asset of Lend Lease Corporations skill setsince its inception.6.1.3 Global – Local Collaboration StrategyAccording to the Oxford Dictionary, the word "globalization" was used for the first time inthe year 1930. Those times seem to be far behind. They are actually far behind indeed. Theglobalization process has produced a major shift in the way regional economies, societies, andcultures behave. An "integration" phenomenon occurred, promoted and encourage by a globalnetwork of communication, transportation, and trade. The world of the new millennium hasdeeply adopted these changing processes generated by the "globalization phenomenon".Thinking only local in these days seems to be outdated.On the other hand, the property industry and especially the construction industry are bothcharacterized by both a local and low-tech business approach. Lend Lease clearly understandsthis fact and knows the importance of collaboration. Furthermore, they see how it has beenbecoming increasingly important over the years and that it will continue to do so untilbecoming a key competitive advantage. Moreover, the need for interaction in this globalenvironment is creating new and different forms of collaboration, such as collaborativepartnerships and collaborative systems. Collaborative software such as GroupWareapplications and Collaborative Project Management Tools are redefining the way peoplework, not only in the property industry but also in most of other industries worldwide.On a global level, this is the reason why communication systems such as the iKonnect102, bothAutodesk Revit® Building Information Modeling (BIM), and Autodesk Buzzsaw®Collaborative Project Management (CPM) systems (see the Value Chain technology section)are key elements for the implementation of Lend Lease Global-Local Strategy. The RealEstate and Construction sectors call for continuing progress in communication and knowledgesharing. By doing it, Lend Lease is ensuring the replication of achievements as well as acontinuing improvement across the global organization. The generation of this collaborativeintelligence is vital to create new solutions for the unique challenges this sector face and willface in the future.102 Lend Lease iKonnect System. Source: http://www.ikonnect.com/ http://kwork.org/Resources/Visio-ikonnect.pdf91 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • On the local level, the company distinguishes the difference cultures, customs and traditionsof each one of its geographies. They look at working with all these diverse stakeholders as anopportunity for growth. But the company knows each, local industry, government andcommunity is unique and requires a different approach towards regulations, labor force, andbusiness in general.Bovis Lend Lease is an essential piece of Lend Lease Global-Local Strategy. Bovis isresponsible for the initiation process of building the group business relationship in newlocations by providing Project Management & Construction Management services. InSingapore for example, since 1973, Bovis has established a strong presence especially in thecommercial & retail, and the pharmaceutical sectors. Afterwards, the Retail and Developmentsegments expanded the business. Scheduled for opening in December 2009, The SomersetProject103 has recently won the Green Mark Platinum Award104 from the Singapore BuildingConstruction Authority (BCA). Once these relations are already well established, otherbusiness segments such as the Investment Management and Lend Lease Development groupsdisembark to upgrade Lend Lease footprint in that particular geography. China is a similarexample to illustrate the case. In the red country Lend Lease has recently design (Lend LeaseDesign together with Bovis), developed, managed and built the Australian Pavilion(http://www.australianpavilion.com/) for the 2010 World-Expo in Shanghai.105The diversification approach has been exercised likewise in Singapore, China, as in manyother places as well. Lend Lease efforts to become both a global and a local organization atthe same time using all its value chain core capabilities is an essential driver for achieving thisgrowth. This actions foundation is supported by a global collaboration and knowledgesharing, in synchronicity with a local presence with solid community relationships.6.1.4 Public Private Partnership (PPPs) Strategy“Public Private Partnerships are partnerships between the public sector and the private sectorfor the purposes of designing, planning, financing, constructing and/or operating projects,which would be regarded traditionally as falling within the remit of the public sector. Theessential elements are the need for capital investment and on-going asset managementservices.” Infrastructure Partnerships Australia, October 2008.106103 Bovis Lend Lease, 313@Somerset Project, Singapore.Source: http://www.bovislendlease.com/llweb/llc/main.nsf/images/pdf_313_2010.pdf/$file/pdf_313_2010.pdf104 Lend Lease 313@Somerset Development. Source: http://www.greenmark.sg/index_ci.php/buildings/detail/111105 Bovis Lend Lease, Australian Pavilion for the 2010 World-Expo in Shanghai, China.Source: http://www.australianpavilion.com/en/about_the_pavilion/design_and_construction.aspx106 Lend Lease Public Private Partnership Strategy. Source:http://www.bovislendlease.com/llweb/llc/main.nsf/images/Mark_Menhinnitt.pdf/$file/Mark_Menhinnitt.pdf92 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • As a consequence of the impacts originated by the current economic downturn that beganwith the GFC in September 2008, Governments all over the world have been deliveringrobust economic stimulus packages looking to reactivate the damaged economy. The privatesectors have suffered in most industries, while many companies have faced bailouts. The realestate market remains frozen in multiple geographies, being the US, UK, Central Europe andthe Middle East the most affected ones. Under this complicated scenario, Public PrivatePartnerships seem to become a potential solution to put economies back in motion.Lend Lease has been focused in Social Infrastructure only where the model makes paymentsavailable. The Health, Housing, Education, Justice, and waste utilities are the predominantsectors. Currently working in the US, Canada, the UK, and Australia, the company perceivesthese countries as providers of secure PPPs platforms. These platforms include a legal body,which protects and encourages the private sector to get involved in this type of ventures.On the other side, governments are interested in this type of partnership for a variety ofreasons. First, they can accurately measure the asset “Total Cost of Ownership”. This iswarranted by a private company, which provides an integrated model comprising design,construction, operations, and maintenance, throughout the property life cycle. Secondly, thecan track on-time delivery compared with poor performance by public agencies. Thirdly,being involved in a competitive process drives innovation and continuous improvement.Finally (most importantly) ensuring far greater transparency and accountability of governmentspends.107Back to Lend Lease and its ability to add value above what the government can achieve ontheir own, the company has demonstrated strong integrated capabilities to become a keypartner for governments all around the world. Its partner, owner, manager, developer,financier and deliverer credentials, and its ability to foster long-term partnerships withGovernment entities, reinforce this strategic position. As a result of this, a wide range ofopportunities for the group are being and will be unfolded in the future.In the UK, Lend Lease Catalyst group108 is advanced in capturing prospects in the health,education, waste and accommodation sectors. The Bexley Wing Institute of Oncology, StJames University Hospital, the Lancashire Building Schools for the Future Programme, andthe Gloucestershire College of Arts and Technology, are some current UK (PPP) partnerships.Adding up, The Australian branch has announced last August 2009 that it has formed anadvisory origination group targeting the Australian Public Private Partnership (PPP)107 Lend Lease Public Private Partnership Strategy. Source:http://www.bovislendlease.com/llweb/llc/main.nsf/images/Mark_Menhinnitt.pdf/$file/Mark_Menhinnitt.pdf108 Lend Lease Catalyst. Source: http://www.catalystlendlease.com/93 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • market.109 Looking forward, current projects include the Brisbane International Airport, andthe Prospect Water Filter Plant and the UNSW Lowy Cancer Research Facility, both in NewSouth Wales, among others. Considering Public Private Partnerships (PPPs)110 such anexceptional potential opportunity in this difficult market conditions, Lend Lease is intensivelyallocating capital and energies towards these types of prospects.6.1.5 Retirement Sector StrategyThe sectors potential for market penetration is gigantic, rating Australia, New Zealand andthe United States as the three priorities for driving expansion. The market is still fragmentedbut rapidly begging to face consolidation process. Large-scale players are emerging withstrong branding, national operating platforms, and access to capital and management skills.However, since the sector is experiencing highly positive dynamics, there seems to be roomfor many of them in the next few years based on the assumption that these dynamics willensure long-term growth over the next 40 years. Furthermore, personal wealth combined withincreasing consumer expectations is supporting an increasing demand that made the sectorsubsist the current recession relatively well.111Lend Lease Strategy towards the Retirement Sector and Senior Living Communities,represents one of the companys priorities. Capital is strongly being allocated into this Sector.In 2009, the company closed the deal for the 100% acquisition of PrimeLife.112 With thisachievement, the subsidiary became the Australian leader in Senior Living Development andAsset Management. Lend Lease PrimeLife113 portfolio is divided into two areas: RetirementVillage Communities & Aged Care Facilities. The subsidiary is still focused in the Australianmarket, where there is also a significant population growth expectation of 20% and anincredible 69% in the 65+ populations over the next 15 years.114 The sector providesopportunities for earnings streams in multiple areas including development, Accrued DeferredManagement Fees, and Asset Management.115 Operators can also generate earnings fromvalue-add services. Lend Lease Investment Management segment is also in line with thisplatform.109 Lend Lease PPP Business Unit. Source: http://www.bovislendlease.com/llweb/llc/main.nsf/all/news_20090819110 Lend Lease Public Private Partnership Strategy. Source:http://www.bovislendlease.com/llweb/llc/main.nsf/images/Mark_Menhinnitt.pdf/$file/Mark_Menhinnitt.pdf111 Retirement Sector Analysis, "Silver opportunity", by Jerry Ascierto. Source:http://www.multifamilyexecutive.com/senior-housing/investors-eye-opportunity-in-independent-living.aspx112 Lend Lease PrimeLife acquisition. Source: http://www.llprimelife.com/database-files/view-file/?id=2770113 Lend Lease PrimeLife. Source: http://www.llprimelife.com/114 Population expected Growth, Australian Bureau of Statistics. Source:http://www8.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/3222.02006%20to%202101?OpenDocument115 Lend Lease PrimeLife Strategy. Source:http://www.lendlease.com.au/llweb/llc/main.nsf/images/pdf_paul_2010.pdf/$file/pdf_paul_2010.pdf94 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Lend Lease integrated platform is also well aligned to maximize opportunities. Based on itscore capabilities, the company has developed a specific value chain for Retirement Projectsinvolving Land development (Lend Lease Delfin)116, deferred management fees (to provideaccess to community centers and other necessary services), village management, valueenhancement (redevelopment, repositioning, and service addition opportunities), and potentialfund management (base fees, scale benefits, etc). In 2010, Delfin Lend Lease had LakesidePakenham community named the Best Master planned development in Australia.117The firm understands successful in this business depends on its ability to reach simplification,value creation and a service culture. Its Retirement Strategy comprises a single platform todrive operational efficiency and a clear brand positioning to good partners. Additionally, agrowing development pipeline based on high quality earnings and the ability to leverage theintegrated model is currently being created. Finally, a strong customer focus, a differentiatedexpertise, a highly motivated workforce, and a recognized determination for integrity andinnovation, are key aspects to achieve an outstanding performance.6.1.6 Urban Regenerations StrategyLend Lease Urban Regeneration, and Urban Development, is a top priority are in the groups"scaling up agenda" for existing platforms. The company is aware of the urban demographictrends and has developed and secured an exceptional Urban Redevelopment pipeline for thenext 10 to 15 years, especially in Australia, the UK, and recently in Singapore. The focus hasbeen placed in finding and negotiating partnerships to redevelop old industrial areas in uniqueurban locations turning them into exclusive mixed-use projects. Based on the previouslymentioned facts awareness, sustainability has taken a major role for Lend Lease both as acompetitive advantage and a solid marketing tool as well.Currently, five major Urban Redevelopments are part of the companys development andmanagement portfolio: The Greenwich Peninsula118, the Stratford-Athletes Village119 (for the2012 Olympic Games), and The Elephant Castle Redevelopment120, all of them in London,UK. In Australia, The Barangaroo Project121 close to the Sydney Opera bay, the Victoria116 Lend Lease Delfin, community development. Source: http://www.delfinlendlease.com.au/117 Delfin Lend Lease awarded, Source: http://www.delfinlendlease.com.au/llweb/dll/main.nsf/all/fp_udia118 Greenwich Peninsula Redevelopment in London,Sources: http://www.greenwich.gov.uk/Greenwich/YourEnvironment/Regeneration/DevelopmentAreas/GreenwichPeninsula/http://www.greenwichpeninsula.co.uk/contentimages/RightPanel/Ravensbourne-College-Building-Information.pdf119 Lend Lease Athletes Village in London, Source: http://www.theathletesvillage.com/120 Lend Lease, Elephant Castel London Redevelopment. Source: http://www.elephantandcastle.org.uk/121 Lend Lease Development, Barangaroo Redevelopment. Source: http://www.barangaroo.com/95 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Harbour project122 in Melbourne and the RNA Project123 in Brisbane, Queensland. Millions ofsquare meters will be developed and built including residential, retail & commercial, offices,hotels, entertainment facilities, among others. Lend Lease is taking advantage of its integratedvalue proposition to be a main active participant in these developments and other projects ofthis type.The Greenwich Peninsula is a £5b large-scale mixed-use urban regeneration. Its main icon isthe O2 Dome Arena124, built during the late 90s to receive the new millennium. After theevent, the amazing structure has been adopted by the Greenwich Council to become the mainLondons world-class entertainment destination. Surrounding the attraction, a major mixed-usedevelopment focus on entertainment has been created under a 20 years scheme includingmany different uses and facilities. The company is delivering construction and projectmanagement services, and carrying out joint management of the project together withQuintain Estates & Development PLC.125Lend Lease is the Developer and Construction Manager for the Athletes’ Village respondingto the Olympic Delivery Authority (client). The project is currently under construction anddoing well within plan, cost, and schedule, having structurally completed seven out of theeleven residential plots. In addition, a structure for an academic building with 420 structuralfloors was completed in four months and ahead of schedule. A remarkable 2 million man-hours worked without any lost time injury (by March 2010) must be included in theoutstanding performance summary of this project.126 127Master planning approvals continue to progress on the Elephant Castel project in London, andthe Barangaroo project in Sydney. Barangaroo represents the biggest urban regeneration inthe history of Australia. The A$6 billion project will ensure a 10-15 year timeframe pipelineof work. The project has been structured under fixed payments aligned to the development-timing proposal. The first stage includes up to 490,000sqm of new construction, developedusing the integrated model and leveraging third party capital. The commercialization of theinitial residential and commercial towers had been targeted by December 2010, representing amultiple revenue stream platform for Lend Lease.122 Vivas Lend Lease, Victoria Harbour Development. Source:http://lendlease.com.au/llweb/llc/main.nsf/images/pdf_info_boards_1-7.pdf/$file/pdf_info_boards_1-7.pdf123 Lend Lease Development, RNA Brisbane. Source: http://www.bovislendlease.com/llweb/llc/main.nsf/all/news_20090513_1124 O2 Arena – Millennium Dome, Source: http://www.theo2.co.uk/inside/book-now.html?Venue=4125 Greenwich Peninsula Urban Regeneration, Source: http://www.greenwichpeninsula.co.uk/default.aspx126 Lend Lease Athletes Village in London, Source: http://www.theathletesvillage.com/page/the-athletes-village127 Stratford- Olympics Athletes Village, source: http://www.theathletesvillage.com/page/our-commitment-to-you96 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • As an example of the impact of one of these projects, the Elephant Castel (currentlyhappening), is a master planning regeneration in London agreed with the Southwark Councilto create an energetic new quarter. When this long-awaited proposal will become a reality, the$1.5 billion, 170-acre regeneration will represent enormous benefits for the local communityand the city of London as well. It will generate 5,200 new and remodeled residential units,four new public areas and green open spaces, two tram routes, landmark buildings, a marketsquare, a city academy for Southwark and a civic heart for south central London. Retail spacewill be increased in 75,000 m2 creating opportunities for new and existing businesses, alsobringing 5,200 new jobs to Elephant and Castle.128The company has secured several Urban Regeneration Developments during 2009 and 2010,taking advantage of its solid financial position and the positive buyer market conditions. Newdevelopments are permanently being targeted, currently focusing in Australia, UK, and China.It is important to take into account that this type of projects has a timeframe range of between7 to 15 years, out coming larger risks and lower incomes at the begging and larger revenuesand lower risks at the end of its long-term period. Therefore, Urban Regeneration Strategyshould be considered a strategic position with significant long-term option value. Lend Leasetakes this into consideration planning the necessary risk management procedures, such asdoing cost engineering with Bovis Lend Lease, fixed-pricing contracts with externalstakeholders, property pre-sales, and tenancy pre-commitments among others to ensuresuccessful outcomes.6.1.7 Sustainability Strategy6.1.7.1 Commitment“The time is not far off when companies will have to justify their worth to society with greateremphasis being placed on environmental and societal impact than straight economics.” 129 Lend Lease founder Dick Dusseldorp, 1973After a large benchmarking within the industry, it gives the impression that Lend Lease hascreated one of the strongest positions on sustainability. Aligned to its vision, Lend LeaseCorporation has become one of the leaders in providing sustainable solutions for the propertyindustry. The company seems to be reaching this, not just as an active advocacy player, butalso as one of the first real businesses achieving a real platform for commercialization of128 Lend Lease, Elephant Castel London Redevelopment. Source: http://www.elephantandcastle.org.uk/129 Famous phrase by Lend Lease founder Dick Dusseldorp, 1973.Source: http://www.lendlease.com/LLC_Annualrep/chairman.shtml97 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • sustainability in the market. In fact, it looks as if commercializing sustainability is among thecompanys prime new growth initiatives.In these days when talking about that “Green Initiatives" makes a difference, the reality showsthat most of the efforts only stay at the advocacy stage as "good intentions". On the contrary,it looks like Lend Lease has developed over the last ten years a well articulated globalstrategy for sustainability seeking to assemble a genuine engine of change. This strategyembraces a massive group of elements throughout the entire value chain, capable ofproducing a real breakthrough.The complete spectrum of variables include a clear corporate vision, a code of conductsupported by core values, persuasive leadership, clear objectives, internal devotion & strongin-house core capabilities, true stakeholders commitment, skilled people, communicationchannels, a well-built and influential structure, global presence and global consistency,operating excellence, social responsibility, a conscious and well developed measuringmethodology, a respected and validated reporting system, a plan to guarantee security, bestpractice, and continuing improvement, and most importantly, an innovative mindset forresearch and development of new solutions. All of them are working together in a globalstrategy.6.1.7.2 Corporate VisionLend Lease’s vision is "to be the leading international property company. We are committedto creating and building innovative and sustainable solutions, forging partnerships and 130delivering strong investment returns." Lend Lease’s Sustainability Vision is to be asustainable organization.6.1.7.3 Code of ConductThe Company Code of conduct, endorsed by the Board of Directors, can be found in thewebsite.131 It describes the expected standards in the conduct of its operations, supporting theGroup’s Core Values and linking them to more specific global, regional and local businesspolicies. The code applies to every employee in each of its subsidiaries.130 Lend Lease Vision, source: http://www.bovislendlease.com/llweb/llc/main.nsf/all/all_whooverview131 Lend Lease Code of Conduct, source:http://www.bovislendlease.com/llweb/llc/main.nsf/images/pdf_lendlease_codeofconduct.pdf/$file/pdf_lendlease_codeofconduct.pdf98 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 6.1.7.4 Sustainable ObjectivesLend Lease Corporation Sustainability Report describes a list of Sustainability Objectivesincluding: a. Sustainable Design and Operation. Integrate sustainability into the design process and achieve a green rating on all leased tenancies, assets under management and developments by 2016. b. Incident & Injury Free. Operate Incident & Injury Free and implement an Integrated Management System. c. Valuing Employees. Encourage employees to grow personally and professionally and nurture a culture of opportunity and diversity. d. Climate Change and Energy Management. Achieve net zero carbon status in the management of leased tenancies and assets under management by 2016 and minimize the embodied carbon footprint of developments. e. Water Management. Achieve net zero water usage on leased tenancies, assets under management and developments by 2016. f. Waste Minimization. Achieve net zero waste to landfill by 2016 on leased tenancies, assets under management and developments. g. Enhancing Biodiversity and Land Use. Achieve a net increase in the ecological value of leased tenancies, assets under management and developments. h. Sustainable Transport Solutions. Establish a Green Transport Plan with the aim of reducing the proportion of car based transport at leased tenancies, assets under management and developments by 50% by 2016. i. Responsible Sourcing. Develop and implement a set of Responsible Sourcing Guidelines to ensure the suppliers and contractors are aligned to the sustainability objectives. j. Community Development. Engage with communities to deliver a successful development, which acknowledges its setting, produces a sense of pride and is valued by the community which it serves.6.1.7.5 Environment Policy CommitmentSubmitted in December 2009, the Environmental Policy Statement shows the aspirations andcommitments in relation to the Atmosphere and Climate Change, Land Use & Biodiversity,Water, Waste, and the Built environment.99 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • "We will continue to promote and pursue a holistic approach to the design, delivery andoperation of green buildings and green precincts that exceeds best practice throughinnovation" 132 Steve Mc Cann, Chief Executive Officer and Managing Director, Lend Lease 20096.1.7.6 Measuring TargetsLend Lease is the only Australian company included in all three globally recognized indexes 133for sustainability reputation: The Dow Jones Sustainability Index134, (measures thefinancial performance of leading sustainability-driven companies), The Goldman SachsJBWere Climate Leadership Index135,(rates how the best companies deal with CarbonEmission and climate change), and The Global 100 Most Sustainable Corporations in the 136World (annually in the Davos World Economic Forum, ranks performance on social,environmental and strategic governance issues). These are the most recognized indexes in theworld, including the best companies with Trillions of dollars in Assets and thousands ofemployees worldwide.In order to become a 100% sustainable company, Lend Lease has established a SustainabilityTarget Audit Framework.137 This structure comprises all the requirements in terms of incident& injury free standards, valuing employees, responsible sourcing, sustainable transportsolutions, water management, sustainable design and operation, waste minimization,enhancing biodiversity and land use, community development, and climate change and energymanagement. Each section describes all the subjects related to the objective. There are threelevels of performance including: a) Little or no progress, b) Some progress towards achievingthe target, c) Target fully achieved, and two additional marks: d) Outside target scope or notapplicable, and e) Target not rated. The group has set many different targets to reduce itsimpact on each of these subjects.6.1.7.7 Reporting sustainabilityLend Lease 2009 Sustainability Report has been divided into four sections: Safety,Environment, People, and Commitment to the Future to be reported internally and externally.132 Lend Lease Environmental Policy. Source:http://www.bovislendlease.com/sustainability/pdf/LendLease_Environment_policy.pdf133 Sustainability Leadership Measurement Indexes, source:http://www.lendlease.com.au/LLC_Annualrep/2009/sustainability_report.html134 The Dow Jones Sustainability Index, source: http://www.sustainability-index.com/135 Goldman Sachs JBWere Climate Leadership Index, source: http://www.gs.com.au/?p=OF_Env_ESGResearch136 The Global 100 Most Sustainable Corporations in the World,Source: http://www.global100.org/ & http://www.go-green.ae/greenstory_view.php?storyid=965137 Lend Lease Target Audit Framework, 2009. Source:http://www.bovislendlease.com/sustainability/ourInfluenceDetail.html#/our-influence-detail100 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • The groups Sustainability performance is regularly updated on a special dedicated websitenamed "Every Action Adds Up" This is the way the company ensures meeting its reportingobligations to all of its stakeholders.138(http://www.lendlease.com/sustainability/index.html#/every-action-adds-up).Internal Reporting covers a variety of purposes ranging from an individual constructionperformance improvement to informing for a group strategy of corporate-level risks andopportunities. It could be implemented to analyze the energy consumption of a certaincommercial center, to verify if it meets the requirements and sustainability aspirations. Theseprocesses involve metrics analysis and benchmarking, transforming performance into data.This information could be utilized in order to reduce energy consumption, evaluatecommodity cost impacts or market trends. Data can also be analyzed for research &development and experimentation. From the external point of view, The Global ReportingInitiative (GRI) has established a worldwide Sustainability Reporting Framework reporting oneconomic, environmental and social performance since the year 2000. In 2010, the GRI holdsmore than 1,000 organizations. While this number is increasing every year, Lend Lease goalis to become a first class organization recognized by the GRI.1396.1.7.8 In-house Core CapabilitiesWith more than 1,000 accredited green building professionals, Lend Lease is a leader insustainable design. The in-house team provides sustainability consultancy services to clients, 140from inception to construction administration, under the internationally recognized LEEDstandards developed by the US Green Building Council (USGBC), helping to deliver newsustainable projects. The companys focus in training their teams in the LEED methodologyplaces them at a leadership position. The teams stand on collaboration, transparency,verification and improvement as main working pillars.6.1.7.9 Commercialization of SustainabilityThe Green Markets are beginning to take off, encouraged by a steady increase in the demandof sustainable solutions. The main factors are the clients, operators and tenants increasedinterest, and the pressure of public opinion and green non-profit organizations such as 141 142Architecture 2030 and the World Building Council which has exponentially growth in138 Lend Lease Sustainability website: http://www.lendlease.com/sustainability/index.html#/every-action-adds-up139 Global Reporting Initiative (GRI), source: http://www.globalreporting.org/Home140 LEED, US Green Building Council (USGBC), source: http://www.usgbc.org/http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1988http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1720141 Architecture 2030, Global Warming & Climate Change, source: http://www.architecture2030.org/101 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • the last 5 years. These types of organizations are strongly promoting sustainable practices inthe Property and Construction Industry Worldwide. US, UK and Australia local GreenBuilding Councils (GBC) are leading the efforts.Lend Lease is at the front of the industry providing innovative sustainable solutions fordifferent types of projects including New Developments, Urban Redevelopments,Refurbishment & Renovations, and Eco-Communities. In the Urban Redevelopment Strategysection, five different large-scale projects were sited to exemplify the sort of projects LendLease holds in its pipeline. In this section, the same projects can be brought back again toillustrate how the Sustainability Strategy is being implemented.Barangaroo143 represents an extraordinary extension of the Sydney Central Business District(CBD). When finished, the site will attract 23,000 day-time workers, and 65,000 within a fiveminute walk, and it will receive an estimative average of 25 million people per year. With2kms of prime waterfront, 355,000m2 office space, 30,000m2 retail & food facilities, 610residential units, and a 250 rooms hotel, it will redefine Sydney water access, and create thenext generation office. The precinct will demand a minimum of 6 Green Star 144 CertificationPerformance, from the Green Building Council Australia (GBCA) rating system. Centralizedcooling systems, blackwater treatment systems, and an internal Precinct for WasteManagement will ensure a Carbon Neutral, Zero Waste, Water Positive outcome to everyconstruction that will be placed in the site.The Elephant Castle 145 in London is one of 16 founding projects of the Clinton Foundation 146initiative denominated The Climate Positive Development Program.147 Two other projects ofthe group are included in this list: The Victoria Harbour Development and the Vic Urban @Officer, both located in Melbourne, Australia. This shows again the influence of Lend Leasefootprint on sustainability.(http://www.youtube.com/watch?v=D1X93xqYOgE&feature=player_embedded#!)142 World Green Building Council, source: http://www.worldgbc.org/143 Barangaroo Project, source: http://www.barangaroo.com/144 Green Building Council, Australia, source: http://www.gbca.org.au/green-star/green-star-overview/145 The Elephant Castel, London, source:http://www.elephantandcastle.org.uk/admin/frameworkfordevelopmentappendices/00,resource,413,415,00.htm146 The Clinton Foundation, Climate Positive Development Program, source:http://www.clintonfoundation.org/what-we-do/clinton-climate-initiative/our-approach/cities/climate-positivehttp://www.clintonfoundation.org/explore-our-work/147 Climate Positive Development Program, List of 16 founding projects, source:http://architectafrica.com/node/1417102 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 6.1.7.10 Injury & Security StrategyIt seems that along with its sustainability vision, Lend Lease is obsessed in become an injuryfree company. Their leadership has declared that fatalities in a construction site are notacceptable. In 2009 the companies recorded 9 fatalities.148 While these seems to represent atremendous achievement taking into account to amount and size of projects in which thecompany participates worldwide, it looks like the leadership wont stop until injuries will becompletely removed from their reports. Technology has been utilized to control report andanalyze any conditions or problems affecting safety. The Safety Dashboard is a web-basedsafety report system designed to provide a central point of reference of all the data to themanagement teams and the executives. Lost Time Injury Frequency Rate Ratios has beenmeasured worldwide to evaluate how incidents are affecting its performance.In the year 2002, the group introduced The Incident & Injury Free Programme, consideringthat the focus should be placed on all the issues related to how behavior affects safety, as acrucial factor for most accidents. The programme involves every aspect of the business, fromthe designs and building to the measuring and rewarding systems. The Incident & Injury FreeGlobal Awards, rewards the most committed and innovative people on safety issues in all thesubsidiaries.149 The company declares the importance of shifting its culture from blaming toaccountability6.1.7.11 Stakeholders commitmentFrom the relationship commitments s point of view, Lend Lease has built significantpartnerships with governmental organizations and with the private sector in order to improvethe standards, quality and logistics of its entire value chain. The organizations include theWorld Green Building Council (WGBC) and its local Councils, The United NationsEnvironmental Programme (UNEP), The World Economic Forum Global Agenda Council onthe Future of Sustainable Construction, The World Business Council for SustainableDevelopment, The United Nations Environment Programme Finance Initiative PropertyWorking Group, and The United Nations Principles for Responsible Investment, GlobalReporting Initiative Construction and Real Estate Sector Supplement, among many others. Inaddition, the company has built strong logistics and distribution channels based on evaluatingits prospective suppliers using Lend Lease Sustainability Standards.Bovis Lend Lease operates a Global Stakeholder & Risk Assessment Filter to establish therisk level associated with different environmental and social aspects. The filter lists considers148 Incidents & Injury Free Programme, source:http://www.lendlease.com.au/LLC_Annualrep/2009/sustainability_safety.html149 Incident & Injury Free, source http://www.bovislendlease.com/llweb/llc/main.nsf/all/all_healthcommitment103 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Community conditions, Stakeholder Opposition, Heritage & Archaeology, Human Rights,Waste & Emissions, Biodiversity, Safety, Reputation and Land Quality. These aspects areassessed at different Risk Levels to decide which type and if a stakeholder engagementstrategy and action plan is required.6.1.7.12 Social ResponsibilityThis might be an area to improve. Although the group has developed many programs, such asthe Community Day, Community Grants, Millers Point Youth Employment Partnership,Building Schools for the Future (Lancashire, UK), among others, and considering theenormous footprint the company has imprinted, there is still room for expansion andenhancement in this field. They have done much, but a lot more could be done if theseprograms are upgraded and developed. Being Property & Construction low tech industries,benchmarked against some high-tech companies such as Google or Adobe, Lend Lease seemsto be obsessed with safety in-house improvements and less concerned with the outside. Itlooks like their footprint is so big that by improving internally they positively affect externalenvironments. The Be-Onsite programme seems to be a cutting-edge idea, looking toincreasing skills in the construction industry.The most impressive program which contraries the previous argument is the RebuildingTsunami Communities Programme. Following the devastation in 2004, a partnership betweenLend Lease and the United Nations Habitat Agency was formed. After the agency haddeclared the affected zones a disaster area and realizing that the overwhelming situation wasdemanding more than simple cash donations, Lend Lease provided both financial support andthe skills and employees experience, who were sent to aid in the rebuilding of some of SriLankas hardest-hit communities.6.1.7.13 Responsible for Sustainable InvestmentAs managers for several funds, Lend Lease has committed to the United Nations Principlesfor Responsible Investment (UNPRI).150 It looks like the group is sending a message to itsown and other investors calling for trustable behavior. They expressed that "sinceenvironmental, social, and corporate governance (ESG) issues could affect investmentportfolios performance, they recognize that applying these Principles may better align150 United Nations Principles for Responsible Investment (UNPRI), source: http://www.unpri.org/104 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • investors with broader objectives of society." 151 In addition, a Responsible Investment Policyhas been created to ensure internal transparency. 152"We understand the concept that a living planet is a much more profitable place to do businessthan a dying planet." 153 ~Greg Clarke, Chief Executive Officer, Lend Lease Corporation, 20076.1.7.14 Cleantech InvestmentThe last significant element influencing Lend Lease Sustainability Strategy is probably one ofthe most important factors seeking an engine of Sustainability creation. Investing in CleanTechnology wraps up this strategy leading to a more sustainable future. Lend Lease iscurrently sponsoring several green ventures focused on renewable energies, as a way to createnew technologic progress to become a Carbon Positive Company.154These investments include a fund of $100 million and a portfolio of six Cleantechinvestments, driving leadership in innovation. Lend Lease strategy towards this type of jointventure is choosing start-ups seeking funds to commercialize proven products and services.All of them are directly or somehow related to the companys expertise including DaintreeNetworks, Better place Australia, Windlab Systems, WJP Solutions, and BioPowerSystems.155 Lend Lease Venture Capital Business is the subsidiary in charge of this segment,and is permanently working together with the rest of the organization bringing innovativetechnologies on-site to new developments. This attempt is seeking Continual Improvement toincrease sustainable efficiency within the organization.6.1.8 Innovation StrategyConsidering the current challenges facing the Property and Construction Industry, it can bestated that never before Sustainability and Innovation were so close to each other. And also,that the need for disruptive innovation has never been so important. Breakthroughs areimportant in all industries, either incremental improvement or dramatic change when anindustry is facing a crisis. Lend Lease plays in an industry that is probably considered to be 156moving towards the second. The FIM wrote about "the Strategy in the eye of the storm"151 Lend Lease Investment Management Commitment, source:http://www.bovislendlease.com/llweb/invmgt/main.nsf/all/au_sust_ochal152 Lend Lease Responsible Investment Policy, source:http://www.bovislendlease.com/llweb/invmgt/main.nsf/all/au_sust_oc153 Greg Clarke Quote, Source: http://www.bovislendlease.com/sustainability/globalReachOverview.html154 Clinton Foundation, becoming a Carbon Positive Company, source:http://www.youtube.com/watch?v=D1X93xqYOgE&feature=player_embedded155 Lend Lease Venture Capital Business, source: http://www.lendlease.com/venturecapital156 FMI, "Strategy in the eye of the Storm", source: http://www.fminet.com/article/587105 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • trying to metaphor the complexity of the current market conditions and the vast necessity tocreate new competitive advantages to succeed in a much more conglomerated environment.In addition to this, Geoff Zeiss (an employee of Autodesk specialized in 3D visualization andgeospatial technology) wrote in his blog "Between the Poles" about the long term challengesfacing the industry.157 He analyzed all the trends that are demanding and pressuring thedifferent participants for a dramatic change. This change seems asking for smarter solutions interms of R&D, communication, measuring systems, and efficiency.Playing in this difficult environment, Lend Lease seems not to be worried, but decided to be apart of the breakthrough. From its external investment and R&D efforts, to its internalcomplete re-shaping all its technologic platforms including design, planning, constructionmanagement processes and logistics, measuring performances of the developments and thedifferent teams, reporting systems, and rewarding initiatives, which has hardly been seenbefore in an industry historically affected by cycles, and a project-based and short termmethodology producing a culture with lack of research, flexibility or improvement.158In this huge industry, historically slow to adapt to changes and when benchmarked with othersectors, its low-tech characteristics made very difficult to create a "Learning Organization"with permanent "Continual Improvement" processes, Lend Lease seems to be willing to breakwith the past. The foundation of its efforts seems to be supported by the iKonnect system (seeTechnology-Value Chain Section). Based on the advantages of this customized software, thecompany has developed initiatives and changed its technological platforms andcommunication systems to maximize knowledge sharing as the key for improving processesand efficiency. 159Project Zephyr , was conceived to imagine a building in the future that would generate allits own energy. This electronic prototype produces and recycles all its water, sends no wasteto landfill. This project was looking to demonstrate the group capability to be able to deliver ittoday. It involved extensive research and detail on a number of opportunities to apply thisunique knowledge in real life to a project. This is an ongoing process that will establish amassive step forward for the industry, becoming first a Zero Carbon and then Carbon Positiveorganization. The company is taking advantage of its large partnership and relationshipsportfolio to address many issues that extend beyond Lend Lease operations, includingmaterials, energy, water, waste and transportation.157 Geoff Zeiss Blog, Between the Poles, source: http://geospatial.blogs.com/geospatial/2007/09/convergence.html158 CII, Breakthrough Process and Charter, source: http://www.construction-institute.org/btsc02.pdf159 Project Zephyr, source: http://www.bovislendlease.com/sustainability/environmentDetailContinued2.html/106 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Project NoW (No Waste), (see Logistics-Value Chain).The Australian Pavilion at the 2010 World-Expo in Shanghai represents another step ininnovation achievements and is being use to show the industry and the market the capabilitiesthe company has as a provider of innovative solutions.1606.1.8.1 The Next Generation StrategyIn addition to Lend Lease Venture Capital (described in the Sustainability Strategy section),Renewable Energies is another strong path towards expansion and creation of future markets.In 2010, a new business venture initially focused in the residential market was created toprovide with Solar Energy Lend Lease Developments as well as to the rest of the AustralianMarket. 161 The partnership was established between Lend Lease Australia, the First Solar 162US branch, and the Norwegian Group REC.163Finally, Lend Lease is also currently working to achieve Zero Net Carbon Homes (zero netenergy LEED Platinum homes), Alternative Materials (partnering with LL Vivas), NextGeneration Commercial Office Buildings (May 2008, The Gauge achieved a 6 Star GreenStar Certified Rating), and Next Generation Retail Centers (The 313@somerset retail centrehas achieved the BCA Green Mark Platinum Award in Singapore), Zero Net Waste, and ZeroNet Water.1646.1.8 Growth Strategy, the path forward…Lend Lease is centering its attention towards their Innovation and Sustainability Strategies.They have reached cutting-edge processes in many areas such as technology andcommunication, measuring systems, procurement integration, resources management, wastemanagement, and clean technologies among the most important ones. These strategies arebuilding the foundation to efface the properly industry future trends.Even though Lend Lease has made enormous improvements benchmarked to the historicallyrigid and monolithic player of the Property & Construction industry, breakthroughs will be160 Lend Lease Australian Pavilion, 2010 World-Expo, Shanghai, source:http://www.australianpavilion.com/en/experience_the_pavilion/mastering_the_challenges.aspx161 Lend Lease moves into solar, Source: http://www.rechargenews.com/energy/solar/article224900.ece162 First Solar, source: http://www.firstsolar.com/en/index.php163 Group REC, source: http://www.recgroup.com/164 On Innovation and R&D, Lend Lease Sustainability-Environment-Detail, source: http://www.lendlease.com.au/sustainability/environmentDetailContinued2.html?search=zephyr#/environment-detail-continued--2-107 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • knocking the industrys door in the coming years looking for the most skilled, better prepared,and with the proper mindset to generate gigantic revolution.Many different researches are being in the most advance centers for construction developmentsuch as the Construction Industry Institute (CII) in London, the European ConstructionResearch Network, and the CASE organization sponsored by SOM in New York.According a recent investigation by the E-CORE named "Strategy for Construction RTD"165this transformation will embrace people, processes, users, and the environment. It will reshapethe industry forever, such as the cell phones or the internet did. It could sound exaggerated,but from past experience we know that when certain industry suffers multiple and overlappedcrisis not only regarding its competitiveness but also involving its inputs, processes, outputs,and outcomes, it is clear that sooner than later the order collapses.The new order will bring the creation of a competitive, innovative, efficient, sustainable, andsocial responsible newborn environment. In order to prepare the field for this ecosystem, awhole new strategic framework must be taken into action. These strategies will be builtaround differentiation which will involve process efficiency (not only cost related),innovation, integration, operational excellence, collaboration, safe work environments, longterm focused relationships, finally driving to hire competitiveness.The industry Trends are putting a lot of pressure on the participants to shift its customs andstart focusing on value, social responsibility, innovation, continual learning, quality over costand finally and fundamentally on clients, people, and the society.New requirements will include new ways of meeting environmental needs on resource andenergy efficiency, reducing consumption and impacts, and creation of new strategies such asmeasuring and control performance systems, localized power generation systems, re-use ofwater in buildings, techniques for on-site processing and waste re-utilization, andminimization of logistics. As it was described in the value chain section as well as in theSustainability Strategy, Lend Lease is fully committed on developing more 100% GreenProjects such as the Gauge (Lend Lease Headquarters, see appendix) and the Bond, bothlocated in the Victoria Harbour in Melbourne.Performance will be the most important from the user perspective also. Measuring andcommunicating building performance will become part of the daily life. So creating newperformance indicators such as energy or water consumption will be the path to buildcompetitiveness and meet the new market needs. This is why new technologies, 3D165 E-CORE, European Construction Research Network, "Strategy for Construction RTD", source: www.e-core.org108 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • visualization systems, and mass customization are already taking a central position in theindustry development. Lend Lease technological & continual improvement strategies areagain in a pole position to pick up these trends.Processes are also being revised, improved. Integrated Project Delivery systems (IPD) aremore and more being adapted in the recent years and Lend Lease is not the exception.Industrialization, whole life thinking, lean production and integration delivery are becomingstrong trends for new prime developments in many sectors such as corporate offices,residential, commercial, and PPPs. Communication, track recording, pre-constructionassessments and 4D practicability are helping to improve processes and leave the historicallyinefficient path back in the past. With a lot of room for improvement, Lend Leases Injury &Incident free programme, together with its iKonnect system for knowledge sharing aremoving forward the company towards reaching operational excellence.As a way to improve the terrible employment conditions that are part of the industry culture,the firm is enhancing its construction employment platform based on the Injury & Incidentfree programme, improving health and safety through mechanization and ConsolidationCenters to avoid accidents and decrease unnecessary danger activities for its people. They arealso developing all types of training programs and communication improvements, which arealso seen as future trends from the people perspective.Finally, Living buildings (see appendix, Living Buildings), Nanotechnologies, autonomousand positive energy buildings, and mass customization, which can be seen far ahead belong tothose innovations that will be waiting for those participants that will find the path to the futurebased on R&D efforts the ability to transcend the industry beyond other sciences such asbiotechnology and other high-tech industries and take this multidisciplinary process as thenew culture the industry.109 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 7.1 ConclusionLend Lease Corporation has developed a strong and integrative strategic framework based onyears of experience in the industry over a wide variety of projects, sectors and businesses inalmost every geographic region worldwide. In the last 20 years, the firm has experience atremendous growth based on a carefully executed acquisition strategy, which enhance its corecapabilities all along the entire property value chain.The Company has taken advantage of this unique key asset to expand its footprint throughoutmany locations in the most specialized and diversified markets such as pharmaceutical,healthcare, education, water treatment and waste management, residential, commercial andretail, among others.From the external environment perspective, as most companies in the industry Lend Lease hassuffered from the impact and consequences of the current recession. However their marketsshare, income statement and positioning don’t look like they have been dramatically harmed.Actually, in July 2010 the board informed that after a 2009 with some loss they are profitableagain. The Bovis Lend Lease Project and Construction Management segment has been crucialto maintain the company healthy, especially benchmarked to other passive player in theindustry which lost revenues and are desperately selling assets. Lend Lease has not taken thatposition and it looks like its going the other way.Some of the reasons why they have recovered so fast are related to the strong positioningLend Lease holds in most of sectors with the highest growth potential. In 2009, the companyhas declared closing an over $15 billion pipeline in the Retirement & Senior Communities,Urban Regeneration, large Mixed-Use Developments, Public Private Partnerships Sectors.They expect to be recovering their asset managements leadership in Australian for theresidential, commercial sectors as soon as projects like Barangaroo and RNA Brisbane beginto sale in 2010.It gives the impression that the financial position of the company supported by its investmentmanagement segment and all its funding, locates Lend Lease in a pole position to takeadvantage of this types of opportunities especially when the property cycle is extremelyfavorable for those with liquidity waiting for the best deal to knock their door.Meanwhile, the markets in Europe, UK, Middle East and the Americas are still challengingespecially in the residential, retail and corporate sectors. In Europe and the US, thingscontinue to be difficult and some of the units are suffering re-structuring and re-engineering to110 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • cut overheads and make the corporate structure more cost efficient. This should be continuingto happen at least during 2010 and part of 2011 until reaching business intelligence.However, thanks to its wide expertise and flexibility of its value proposition the firm remainsvery busy with segments such as the PPPs (education and health) in the UK, pharmaceutical& commercial in Singapore, Communities in Australia, and PM & CM everywhere the stormsis gone. Asia Pacific (Asia, Australia and New Zealand) looks like those sunny destinations.On the other side of the globe there is still too much uncertainty, confusion, and lack ofconfidence. Asia looks as if they don’t have time to lose asking themselves questions, whileChina is already the second biggest world economy overtaking Japan since August (just aweek ago) and is expected to be the first before 2020.There seems to be missing a strong presence in strong developed economies such asCalifornia, Japan, Malaysia, and Singapore, this last one where the company is focusingefforts as we speak with the 313@Somerset retail project, and a recent closing for a majorredevelopment where the firm bid the highest paying over 700 million for the land (seeappendix, Lend Lease latest news). The same goes for developing countries such as India,Thailand, Brazil, Mexico, Central America (Mexico Costa Rica), and North and South Africa.China is currently seen as the major target, and the Australian Pavilion plus a lot of talkdenotes to be more than an intention. On the other hand, developing aggressive expansivestrategies beyond the known "market penetration" ones appear to be out of context especiallyin these emerging countries where lack of regulations an excessive bureaucracy increasedevelopments risks to the sky.In terms of the internal aspects, the company has achieved terrific advance in informationbuilding, communication, knowledge sharing, and global collaboration, technologicalmodernization, logistics, safety & security, and waste & energy management. Still there isroom for improvement within the companys value chain especially in the Operations arenaand the Human Resources Rewarding & Motivation System.As Michel Porter mentioned in the "Competitive Strategy and Real Estate Development at theHarvard Business School Real Estate Symposium (1989), "there are really two criticaldimensions of success in your business. The first is finding the good deals. Finding thoseprojects, finding those tenants, finding those locations that are going to be economicallyattractive. The second critical dimension of the business is executing those deals well. So youfind the project but then you are able to build it on time and make sure it is nice and deliver itup to expectation." There is no doubt that holds outstanding capabilities for accomplishingPorters first dimension. They deeply know the industry in which the play, they have strong111 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • core capabilities based in its integrated value proposition and solid resources thanks to a welldeveloped and highly diversified incomes generator business intelligence.They are also aware of the second dimension and they have focus most energies over the pastfew years in creating an efficient, specialized, flexible, highly connected, collaborative, andsustainable work environment. One of its main goals for the years to come is to build adynamic and smart corporate structure with what Porter described as "superior marketintelligence". As Porters mention in the Harvard Business Review article "What is Strategy?"(1996), "a company can outperform rivals only if it can establish a difference that can bepreserved". It looks like in the current Property Industry Lend Lease has developed adifferentiation strategy based on offering "integrated value chain solutions" which is veryhard to duplicate. Lend Lease Group strategies, look are if have been carefully planned andimproved over the years by the wide expertise the company has collected.7.2 Main Detected ProblemsAfter an extensive analysis involving the external forces and internal elements that create theLend Lease Corporations world, some important issues for improvement has been detected.Based on the SWOT analysis two major areas of study has been broken down to identifythose issues where the company is weak or is facing difficulties.The "External Problems" involves all the major challenges that the organization is facingeither because of the current market conditions or as the potential consequences of theindustrys future. This type of issues can be considered threat for the company in the presentand in the future as well.The "Internal Problems" includes all the detected issues that can be considered weaknesseswithin the organization and its strategies. These difficulties comprise both problematicelements inside the organizations Value Chain as well as the strategies that are not beingconsidered in the Strategic Mapping. Among these last ones, it also includes those detectedpoints that need to be improved in existing strategies.7.2.1 EfficiencyThe main problem affecting most of the players of this industry lays somewhere within itsoperation system. In this case, Lend Lease is facing certain level of inefficiency normal in theindustry. Even though the Operational performance of the company is far over the average,there is still a road to reach Excellence. Lend Lease operations are good but not great, there isstill a lot of room for improvement. Legal issues such as the investigations after the fire in one112 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • of the projects the group developed in New York is an example of need to generate permanentprocess innovations and reach continual improvement.Standardization of systems is still needed to be 100% completed not fully adapted. BIMsystems are already in place BREAM & LEED standards to measure Sustainability are stillbeing adapted throughout the organization.The main issues to improve reaching operational excellence are including: Technologyapplied to acceleration of teams process coordination, Management and Cost control, 100%Sustainable design, construction, and operations, Document Quality Control to reduce risksand errors, 100% Safety in the workplace, ensure the totality of the organization generatesKnowledge Sharing, decrease preliminary phases inefficiency and maximize due diligences,ensure Continual Communication improvement, ensure Continual Process and productionimprovement, and ensure effective Risk management processes.7.2.2 CapitalAnother problem during the past three years has been the decrease of dividends and FinancialPerformances as a result of the economic downturn. Recovery after recession has beendetected and last month the board mentioned the company returned to its "profitability path".The capital allocation strategy has been well defined as well as investment funding. However,it has been noticed that funding and capital rising for new developments was weaker in 2009than the previous years. This might be related to the lack of confidence around the markets.In addition, another major issue and unrelated to the current market conditions is the "dry-holes characteristic" of the industry. Avoiding those "dry-hole" periods represent one of themain challenges for every participant in the property industry. this problem is even worseduring period like the current where "dry-holes" can become the norm instead of theexception. Creating a Strategy of avoiding dry-holes can become "the true advantage" in thisindustry. Lend Lease integrated solution value proposition seems to be one of the mostefficient ways to vertically integrate doing more and taking the greatest advantage of theproperty value chain. However, this doesn’t seem to be a complete solution if we considerthat some of the groups affected business segments (such as retail and residential) andgeographies (such as US, Europe, and the Middle East) do count on this advantage to avoid"dry-holes". These slow times represent a hidden cost for organizations, which are spendingenormous amounts of money to keep their corporate structures until they cannot do itanymore. Reducing the number of dry holes becomes then a critical success factor for LendLease as a major player in the Property Industry.113 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 7.2.3 Structure inefficiencyAlmost as a consequence of the last problem, the overhead structure resulted as aconsequence of the declining of the market activity is the second major issue the company isfacing in 2010. Upper CEOs structures are about to be reduced in Europe and the US. Thisarea also needs continuous improvement and re-sizing to create the right and more efficientstructure. Both re-engineering and re-structuring strategies are going to be essential to achievethe highest business-intelligence in the marketplace.7.3.4 Human Resources Rewarding SystemLend Lease has several strong policies regarding equality within employees. The emphasis inmeasuring employees commitment seems to be one of the biggest concerns related to thegroups HR Management activities. However, benchmarked with other industries, theEmployee Motivation System seems not to be good enough. Considering Lend Lease has over10,000 employees in-house across the globe and in so committed with sustainability,innovation, collaboration and continuous improvement and organizational learning, thisseems to take a major importance as the supportive element of the business. Then, it ispossible to conclude that both the Motivation and the Rewarding systems should be improved.Furthermore, this is the key element to building long-term relationships.In addition, a lot of efforts have been made regarding what Porter defines in its "Strategy andSociety: The Link between Competitive Advantage and Corporate Social Responsibility"(2006) Harvard Business Review, the Value Chain Social Impacts that are those social issuesdirectly related with the companys activity. However, a lot of community involved isnecessary for a leader in major property development which in most cases affects people andcommunities lifestyle and life quality.7.2.5 Internal Research and Development (R&D)Lend Lease has developed a strong platform of R&D based on Lend Lease Venture Capitalpartnerships and investments in clean technology and renewable energies. However, it seemsthat there is still a gap within the organization in relation to internal R&D or partnerships todevelop new construction materials, and Architectural & Urban Design research to createinnovative solutions for new products, transformational typologies of habitation, andrevolutionary concepts of urbanism to improve the cities of the future.114 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 7.2 RecommendationsThe set of recommendations has been divided into three stages: Fixing (F), Developing (D)and Leading (L). The idea is to establish three consecutive milestones as a timeframe andmeasuring deadline to benchmark progress. The milestones are set for 2010, 2013 and 2016.The main two drivers directing the objectives are reaching 100% of both Integration andSustainability. The five comprised fields include Operations (O), Capital (C), Structure (S),People (P) and Innovation (I), each of them represented with a different color in theRecommendations Schemes and the Strategic mapping.Operations (O)This recommendation involves the main elements to achieve operational excellence. Thecompany will follow its continual improvement process with its value chain, Injury &Incident free programme, technology and communication, measuring and reporting systems.A specific group within the operational global department will be created to assess the COOregarding all kinds of issues detected in the systems regarding on-site reports. Statistics willensure new measuring variable unused in the past. All the past measuring and reportingsystems will be reviewed to see if now elements can be adopted the already extremelycomplete Lend Lease M&R system.Automation and mechanization programs will begin to be developed to include in the shortterm new technologies on the site to free employees from the risky activities. This activitiesand processes will be define by the group and applied on a "trial site". If successful, theprocesses will be expanded to the rest of the organization. Additionally, new logistics formswill be designed such as the Collaboration Center to improve efficiency on site.Capital (C)This recommendation includes some priorities on how to manage capital as a mechanism ofgrowth. It mainly involves capital recycling processes of Lend Lease equity and funds such asthe Australian Funds.Australian markets and Asia should be considered the main target for capital allocation andgrowth. The creation of a new investment fund will be implemented to open markets in Asiaespecially in China and Singapore. Expansion will include segments such as retail, UrbanRedevelopment, Eco-Communities, and Retirement and Senior Living pipeline for the comingyears.115 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Profitability and financial healthy trends after the recession will be closely analyzed to ensurethe best decision making process to maintain financial strength and a growth performance inthe next decade.Finally, capital allocation into HRM and R&D will be analyzed to support (P) and (I) projectsand ventures.Structure (S)This recommendation involves the inclusion of re-engineering consultants working in houseon a one to two-year project together with the leadership. The objective will be to analyzeeach structure, business unit, branch of the group. During the process the leadership team willevaluate the different stages and make decisions on how to re-size and re-define the corporatestructure looking to achieve the best business-intelligence.People (P)The main recommendations includes the enhance HRM Rewarding and motivation systems,to expand skills and recruitment of talented people attempting & Long-term Relationships,leadership development, corporate culture enhancement, and talent growth. The constitutionof new multi disciplinary teams will be adopted, to generate additional interchange of peoplewith the organization using iKonnect and beyond the industry and the academia. A newCenter of excellence to encourage deeper skills will be created to collaborate recruiting andretain new staff.HRM new Rewarding systems will include a new compensation system involving Short-termincentives, Annual Incentive Program, Team bonus, Long-term incentives, Employee StockPurchase Plan, matching systems, restricted stock units, Stock options, and benefits. A new"Time off plan" will be adopted, including a sabbatical, holidays and additional benefits.Fitness and health programs will be provided. Commute alternative programs will be createdunder Lend Lease Sustainability standards to offer commute and ensure employees tocommute Green. Education assistance programs will provide 100% of the cost of fees andtuition for employees regarding a system of merits.Innovation (I)The Lend Lease Mitosis R&D DepartmentThis recommendation intend to ensuring skills for the future in the field of Urban design,Urban Planning, New forms of Organic-Architecture and new habitat analysis such as Living116 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Buildings and Agro-Housing projects, Permaculture developments and Eco-villages.Additionally, a higher level of scientific involvement and multidisciplinary R&D workprocesses including Nanotechnology, Biology (Biodiversity), Biotechnology, andenvironmental engineering. High-tech industries applied to communication or similar aspectsthat will enhance the buildings of the future will also be considered.Although these processes are not directly focused to create innovations to apply in themarkets in the short-term (1-5 years), they will provide a vast amount of research that will betransform into products and solutions for the property in the mid and long-term. Partnershipswith organizations such CASE / SOM, Archinode Studio, BIOWorks, Terreform ONE,Ecogram, Terrefuge, the Building Research Establishment, BSRIA, CIRIA, HR Wallingford,Steel Construction Institute, TRADA, Technology Ltd among others are going to be pursuit.Also a partnership with Autodesk solutions will be reached to joint efforts in development ofnew software solutions.All this recommendation will be taken place in the already mentioned (F), (D), and (L) stageswith specific milestones, objectives and evaluation processes for each of the fields.Performance adjustment analysis and evaluations and repots will be submitted to theleadership team and the Board of Directors at the end of each period.Hoping to improve each and all the nodes of the system and made them efficiently worktogether to enhance the overall performance of the organization, this set of recommendationshas been designed as an outline to establishing the companys direction. This is the pathtowards positioning Lend Lease Corporation as the first 100% sustainable organization leaderin providing the 100% integrated, innovative and sustainable property solutions of the future.10.8 2.2 18117 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • PEOPLE STRUCTURE CAPITAL OPERATIONS INNOVATION 10 12 16 FIXING DEVELOPING LEADING1 APPENDIX
    • INTEGRATION STRATEGIES S P F D C L I O2 APPENDIX
    • DYNAMICS VISION S 100% P F D C L SUSTAINABLE I O 2010 2013 20163 APPENDIX
    • Recommendation Map Vision > Leadership in Sustainable Property SolutionsStrategic Framework Improve Increase revenue Accelerate product Financial Perspective existing segments & markets innovation productivity Customer Perspective Quality 100% Green Innovative Leadership buildings solutions Internal R&D New Materials Improve operations External Ventures IT systems efficiency Renewable energies Collaboration Operational excellence Process Perspective Re-engineering Continual improvement 100% structure to build the Learning Sustainability Organization Intelligence Learning & Growth Expand skills, & Long-term Enhance HRM Enable Leadership, Relationships with Rewarding and corporate culture, 4 APPENDIX stakeholders motivation systems Talent growth Create a high performance culture
    • 8.1 BibliographyAnsoff, Product-Market Growth Matrix, Source:http://www.quickmba.com/strategy/matrix/ansoff/Architectural firms in the US. Source:http://archrecord.construction.com/practice/top150/0706top150.asp Idem 8. Source:http://www.archdaily.com/23244/top-architecture-firms-ranking/Architecture 2030, Global Warming & Climate Change, source:http://www.architecture2030.org/ASITE™ Collaborative System, Source:http://www.asite.com/docs/Case%20Study%20Stanhope.pdfAutodesk, AutoCAD Software, Source: http://en.wikipedia.org/wiki/AutoCADAutodesk Buzzsaw® (CPM).Source:http://images.autodesk.com/emea_nw_w_main/files/bovis_lend_lease_customer_story.pdf Autodesk® Collaborative Project Management, Source:http://www.autodesk.co.uk/adsk/servlet/pc/item?siteID=452932&id=13059673&linkID=14303569Autodesk, Source: http://en.wikipedia.org/wiki/AutodeskBarangaroo Project, source: http://www.barangaroo.com/BCG Growth Share Matrix, Source: http://en.wikipedia.org/wiki/Growth-share_matrixBovis Lend Lease, Australian Pavilion, 2010 World-Expo China, source:http://www.australianpavilion.com/Bovis Lend Lease, 313@Somerset Project, Singapore. Source:http://www.bovislendlease.com/llweb/llc/main.nsf/images/pdf_313_2010.pdf/$file/pdf_313_2010.pdfBovis Lend Lease History source:http://www.bovislendlease.com/llweb/bll/main.nsf/all/all_who_historyBuilding Information Modeling (BIM), Source:http://en.wikipedia.org/wiki/Building_Information_ModelingBuilding Information Modeling, Source: http://usa.autodesk.com/company/building-information-modelingBusiness Plan, Source: http://en.wikipedia.org/wiki/Business_planBusiness Strategy Mapping, Source: http://en.wikipedia.org/wiki/Business_Strategy_MappingCII, Breakthrough Process and Charter, source: http://www.construction-institute.org/btsc02.pdf118 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • CII, Breakthrough Strategy Committee (BTSC), Blog Between the Poles, All aboutinfrastructure, Source:http://geospatial.blogs.com/geospatial/2007/09/convergence.htmlClimate Positive Development Program, List of 16 founding projects, source:http://architectafrica.com/node/1417(http://www.youtube.com/watch?v=D1X93xqYOgE&feature=player_embedded#!)Clinton Foundation, becoming a Carbon Positive Company, source:http://www.youtube.com/watch?v=D1X93xqYOgE&feature=player_embeddedCollaborative Software, Source: http://en.wikipedia.org/wiki/Collaborative_softwareConstruction Industry Introduction, source: http://en.wikipedia.org/wiki/ConstructionConstruction Industry Strategic Survey 2009, “Strategy in the eye of the Storm”, Exhibit 1.Source: http://www.fminet.com/article/587Customer Relations, Source: http://www.nextdigital.com/our-work/clients/vivas-lend-lease/website.aspxCNN Money, Fortune Magazine quotation, source:http://money.cnn.com/magazines/fortune/fortune_archive/1987/06/08/69109/index.htmSource: http://www.economywatch.com/world-industries/construction/trends.htmlCSIRO Technologies, Source: http://www.sustainablebuildingproducts.com.au/news/lend-lease-fund-to-trial-new-csiro-technologyDavid Langdon Cost Model for Waste Management, Source:http://www.davislangdon.com/upload/StaticFiles/EME%20Publications/CostModels/CostModel_0410.pdfhttp://www.carboninnovation.com/discussion/viewtopic.php?t=702&highlight=&sid=289b36ebe22677297d80a4373f54c8c2http://www.wasteawareconstruction.org.uk/cases/case2.asphttp://www.bovislendlease.com/llweb/bll/main.nsf/all/news_20040917bllData collection, source: http://en.wikipedia.org/wiki/Data_collectionDelfin Lend Lease awarded, Source:http://www.delfinlendlease.com.au/llweb/dll/main.nsf/all/fp_udiaDow Jones Sustainability World Index, Source: http://www.sustainability-index.com/FMI, "Strategy in the eye of the Storm", source: http://www.fminet.com/article/587First Solar, source: http://www.firstsolar.com/en/index.phpGeoff Zeiss Blog, Between the Poles, source:http://geospatial.blogs.com/geospatial/2007/09/convergence.html119 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Global Financial Crisis, source:http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010Global Reporting Initiative (GRI), source: http://www.globalreporting.org/HomeGlobe Williams International, on Facility Management Services, Source:http://www.globewilliams.com/?p=187Goldman Sachs JBWere Climate Leadership Index, source:http://www.gs.com.au/?p=OF_Env_ESGResearchGreen Building Council, Australia, source: http://www.gbca.org.au/green-star/green-star-overview/Greenwich Peninsula Redevelopment in London, Sources:http://www.greenwich.gov.uk/Greenwich/YourEnvironment/Regeneration/DevelopmentAreas/GreenwichPeninsula/http://www.greenwichpeninsula.co.uk/contentimages/RightPanel/Ravensbourne-College-Building-Information.pdfGreenwich Peninsula Urban Regeneration, Source:http://www.greenwichpeninsula.co.uk/default.aspxGroup REC, source: http://www.recgroup.com/Human Population to 2050: Problems and Opportunities. Source:http://www.youtube.com/watch?v=-4vOz5JmBPA&feature=channelHuman Population to 2050: Problems and Opportunities, Professor Joel Cohen fromColumbia University. Lecture at the Hebrew University. Source:http://www.youtube.com/watch?v=-4vOz5JmBPA&feature=channeliKonnect System detailed chart, Source: www.kwork.org/locators.html.iKonnect System platform, Source: http://www.ikonnect.com/ iKonnect System, Source: http://www.knowledgestreet.com/Knowledge_Street_Report_-_BLL_ikonnect.pdfIncidents & Injury Free Programme, source:http://www.lendlease.com.au/LLC_Annualrep/2009/sustainability_safety.htmlIncident & Injury Free, sourcehttp://www.bovislendlease.com/llweb/llc/main.nsf/all/all_healthcommitmentInnovation, Source: http://en.wikipedia.org/wiki/InnovationInternet technology systems, Source:http://www.meridiansystems.com/newsevents/PressReleases/press-Sep_26_01-Bovis.aspInteroperability, source: http://en.wikipedia.org/wiki/InteroperabilityJim Rowe. (2008). Studying Strategy, Jim Rowe & Ventus Publishing Aps120 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • LEED, US Green Building Council (USGBC), source: http://www.usgbc.org/http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1988http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1720Lend Lease 2009 Annual Report & Geographic implications. Source:http://www.lendlease.com/LLC_Annualrep/2009_Flash/index.htmLend Lease 2009 Annual Report, Segment Summary. Source:http://www.lendlease.com/LLC_Annualrep/2009/segment_summary.htmlLend Lease Athletes Village in London, Source: http://www.theathletesvillage.com/Lend Lease, BIM Case Study. Source:http://bim.arch.gatech.edu/data/reference_paying/ba06_6.pdfLend Lease Australian Pavilion, 2010 World-Expo, Shanghai,Source:http://www.australianpavilion.com/en/experience_the_pavilion/mastering_the_challenges.aspxLend Lease Business Model & Competitive Advantages,Source:http://www.lendlease.com.au/llweb/llc/main.nsf/images/Tony_Lombardo.pdf/$file/Tony_Lombardo.pdfLend Lease Capabilities, Source:http://www.bovislendlease.com/llweb/llc/main.nsf/all/ob_pvc Source:http://www.actuslendlease.com/llweb/all/main.nsf/all/fp_all_allianceSource:http://www.bovislendlease.com/llweb/bll/main.nsf/all/ss_asia?OpenDocument&ExpandSection=5Source:http://www.coinsglobal.com/cp_root/h/COINS_News/Improving_Procurement_Efficiency/1128/ Source: http://www.bitc.org.uk/resources/case_studies/lend_lease_change_1.html Source: http://www.actionsustainability.com/news/172/Lend-Lease-collaborates-with-FirstSolar-to-provide-solar-energy-solutions-/ Source: http://www.hvnplus.co.uk/lend-lease-buys-into-schools-show/3101497.articleLend Lease Catalyst. Source: http://www.catalystlendlease.com/Lend Lease Catalyst initiatives. Source: http://www.catalystlendlease.com/(http://www.theathletesvillage.com/page/the-athletes-village) (http://www.barangaroo.com) Lend Lease Code of Conduct, source:http://www.bovislendlease.com/llweb/llc/main.nsf/images/pdf_lendlease_codeofconduct.pdf/$file/pdf_lendlease_codeofconduct.pdfLend Lease Corporation History Highlights, Source:http://www.lendlease.com/llweb/llc/main.nsf/all/all_who_historyLend Lease Corporation History, source: http://en.wikipedia.org/wiki/Lend_Lease_Group121 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Lend Lease Development, Barangaroo, Sydney. Source:http://www.barangaroo.com/downloads/Media%20releases/Barangaroo_Progress_Report_Dec09.pdfLend Lease Development, 2012 Olympic Village. Source:http://www.london2012.com/news/2007/09/olympic-village-legacy-vision-revealed.phpLend Lease Development, RNA Brisbane. Source:http://www.bovislendlease.com/llweb/llc/main.nsf/all/news_20090513_1Lend Lease Efforts in China. Source: http://www.theaustralian.com.au/business/lend-lease-eyes-china-for-property-growth/story-e6frg8zx-1225872276473Lend Lease, Elephant Castel London Redevelopment. Source:http://www.elephantandcastle.org.uk/Lend Lease Environmental Policy. Source:http://www.bovislendlease.com/sustainability/pdf/LendLease_Environment_policy.pdfLend Lease Health & Safety Programme, Source:http://www.lendlease.com/sustainability/index.html#/health-and-safety-detailLend Lease iKonnect System. Source: http://www.ikonnect.com/http://kwork.org/Resources/Visio-ikonnect.pdfLend Lease Integrated Solutions, Source: http://www.Strategy_Rod_Leaver_2009.pdfLend Lease Investment Management Commitment, source:http://www.bovislendlease.com/llweb/invmgt/main.nsf/all/au_sust_ochalLend Lease Last News, source: http://www.theage.com.au/business/lend-lease-restores-balance-20100816-1272g.html Source: http://www.cnbc.com/id/38717839Lend Lease Marketing Methods, Source: http://cohnmarketing.com/lend-lease-communities/Lend Lease Marketing Strategies, Source: http://tatianamijalica.com.au/services/marketing-strategies/Lend Lease moves into solar, Source:http://www.rechargenews.com/energy/solar/article224900.eceLend Lease PPP Business Unit. Source:http://www.bovislendlease.com/llweb/llc/main.nsf/all/news_20090819Lend Lease PrimeLife. Source: http://www.llprimelife.com/Lend Lease PrimeLife acquisition. Source: http://www.llprimelife.com/database-files/view-file/?id=2770Lend Lease PrimeLife Strategy. Source:http://www.lendlease.com.au/llweb/llc/main.nsf/images/pdf_paul_2010.pdf/$file/pdf_paul_2010.pdf122 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Lend Lease Public Private Partnership Strategy. Source:http://www.bovislendlease.com/llweb/llc/main.nsf/images/Mark_Menhinnitt.pdf/$file/Mark_Menhinnitt.pdfLend Lease Responsible Investment Policy, source:http://www.bovislendlease.com/llweb/invmgt/main.nsf/all/au_sust_ocLend Lease Safety Overview, Source:http://www.lendlease.com/sustainability/index.html#/health-and-safety-overviewLend Lease Strategies, Source: http://www.Strategy_Steve_McCann_2009.pdfLend Lease Strategy, Capital Allocation & Management. Source:http://www.lendlease.com.au/llweb/llc/main.nsf/images/Brad_Soller.pdf/$file/Brad_Soller.pdfLend Lease Strategy, Competitive Advantage Presentation, Source:http://www.bovislendlease.com/llweb/llc/main.nsf/images/pdf_trans_tonylombardo_13may09.pdf/$file/pdf_trans_tonylombardo_13may09.pdfLend Lease Sustainability. Source:http://www.lendlease.com/sustainability/index.html#/smarter-systems-detailLend Lease Sustainability website:http://www.lendlease.com/sustainability/index.html#/every-action-adds-upLend Lease Target Audit Framework, 2009. Source:http://www.bovislendlease.com/sustainability/ourInfluenceDetail.html#/our-influence-detail(http://www.lendlease.com/sustainability/index.html#/every-action-adds-up).Lend Lease Value Proposition, Source:http://www.lendlease.com/LLC_Annualrep/2009/value_proposition.htmlLend Lease Venture Capital Business, source: http://www.lendlease.com/venturecapitalLend Lease Vision, source:http://www.bovislendlease.com/llweb/llc/main.nsf/all/all_whooverviewLend Lease website, source: http://www.lendlease.com/List of Architectural firms in Australia. Source:http://en.wikipedia.org/wiki/Category:Architecture_firms_of_AustraliaList of Architectural firms worldwide. Source:http://en.wikipedia.org/wiki/List_of_architecture_firmsIdem 6. Source: http://www.architecture-page.com/go/architecture-category/design-architecture-firmsList of A-REIT in Australia, Source:http://en.wikipedia.org/wiki/Australian_real_estate_investment_trust123 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • List of REIT in the US. Source:http://en.wikipedia.org/wiki/List_of_public_REITs_in_the_United_StatesLogistics in Construction: More than Materials, Alan Mossman.Source: http://www.thechangebusiness.co.uk/TCB/Lean_Construction_files/More-than-materials-Construction-Logistics-ECCL.pdf Source:http://www.constructingexcellence.org.uk/zones/logisticszone/consolidationcentre.jsp Source:http://www.bovislendlease.com/llweb/llc/main.nsf/all/fi_finrep_currentMichael Porter (1986). Competitive Strategy, Harvard Business School PressMichael Porter (1989) Competitive Strategy and Real Estate Development, Remarks to the1989 Harvard Business School Real Estate Symposium. Source:http://www.isc.hbs.edu/Porter_Strategy_Real_Estate1.pdfMichael Porter, Five Forces Industry Analysis, Source:http://en.wikipedia.org/wiki/Porter_5_forces_analysisMichael Porter, Porter Generic Strategies, Source:http://en.wikipedia.org/wiki/Porter_generic_strategiesMichael Porter & Mark R. Kramer (2006) Strategy & Society, Harvard Business Review.Source: http://www.fsg-impact.org/ideas/item/strategy_and_society.htmlMichael Porter, Value Chain Analysis, Source: http://en.wikipedia.org/wiki/Value_chainMichael Porter (1996). What is Strategy? Harvard Business Review. Source:http://hbr.org/product/what-is-strategy/an/96608-PDF-ENGNeil, Ritson. 2008. Strategic Management. Neil, Ritson Ventus Publishing ApsNew Singapore, source:http://www.asiaone.com/Business/My+Money/Property/Story/A1Story20100628-224253.htmlhttp://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_519290.htmlNightWatchman Case Study, Source:http://www.1e.com/download/whitepapers/Bovis_Lend_Lease_CaseStudy.pdfNightWatchman system, Source:http://www.1e.com/softwareproducts/nightwatchman/index.aspxO2 Arena – Millennium Dome, Source: http://www.theo2.co.uk/inside/book-now.html?Venue=4On Innovation and R&D, Lend Lease Sustainability-Environment-Detail, source:http://www.lendlease.com.au/sustainability/environmentDetailContinued2.html?search=zephyr#/environment-detail-continued--2-PEST Environmental Analysis, Source: http://en.wikipedia.org/wiki/PEST_analysis124 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Population expected Growth, Australian Bureau of Statistics. Source:http://www8.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/3222.02006%20to%202101?OpenDocumentPrivate Public Partnerships (PPPs) Model, Source:http://en.wikipedia.org/wiki/Public%E2%80%93private_partnershipProject Zephyr, source:http://www.bovislendlease.com/sustainability/environmentDetailContinued2.html/Property Management field description, source: http://en.wikipedia.org/wiki/Real_estateRethinking Construction Innovation and Research a Review of Government R&DPolicies and Practices by Sir John Fairclough Source:http://www.berr.gov.uk/files/file14364.pdfRetirement Sector Analysis, "Silver opportunity", by Jerry Ascierto. Source:http://www.multifamilyexecutive.com/senior-housing/investors-eye-opportunity-in-independent-living.aspxRobert S. Kaplan (2010) Conceptual Foundations of the Balanced Scorecard.Working Paper, Harvard Business School. Source: http://hbswk.hbs.edu/item/6395.htmlRobert S. Kaplan, the Balanced Scorecard (BSC), Source:http://en.wikipedia.org/wiki/Balanced_scorecardSlideshare Present Yourself. Arvetica (2007), Strategy Grand Tour.Source: http://www.slideshare.net/arvetica/strategy-grand-tourStakeholders & engineering process, Source:http://en.wikipedia.org/wiki/Engineering_process_outsourcing#AEC_stakeholdersStrategy Concepts. CompanCopyright © Houghtoy.Strategy for Construction, RTD, European Construction Research NetworkSource: http://www.eccredi.org/pages/E-CORE_NL.pdf 2008 BERR,Strategy for Strategic Management, Source:http://en.wikipedia.org/wiki/Strategic_managementStratford- Olympics Athletes Village, source: http://www.theathletesvillage.com/page/our-commitment-to-youStrategy Map, Source: http://en.wikipedia.org/wiki/Strategy_map#cite_note-cmrarticle-0Strategic Planning, Source: http://en.wikipedia.org/wiki/Strategic_planningStrategic Sustainable Development, Source:http://en.wikipedia.org/wiki/Strategic_Sustainable_Development125 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Subprime Mortgages Credit Crisis, source: http://en.wikipedia.org/wiki/Mortgage_crisisSustainable Construction, UK Source: http://www.berr.gov.uk/files/file46535.pdfSustainability Leadership Measurement Indexes, source:http://www.lendlease.com.au/LLC_Annualrep/2009/sustainability_report.htmlSWOT Internal Analysis, Source: http://en.wikipedia.org/wiki/SWOT_analysisThe Business Model, Source http://en.wikipedia.org/wiki/Business_modelThe Clinton Foundation, Climate Positive Development Program, source:http://www.clintonfoundation.org/what-we-do/clinton-climate-initiative/our-approach/cities/climate-positive http://www.clintonfoundation.org/explore-our-work/The Dow Jones Sustainability Index, source: http://www.sustainability-index.com/The Elephant Castel, London, source:http://www.elephantandcastle.org.uk/admin/frameworkfordevelopmentappendices/00,resource,413,415,00.htmThe Global 100 Most Sustainable Corporations in the World, Source:http://www.global100.org/ & http://www.go-green.ae/greenstory_view.php?storyid=965The value of BIM, Source:http://images.autodesk.com/adsk/files/final_2009_bim_smartmarket_report.pdfTop 50 global construction companies, Source:http://enr.construction.com/people/toplists/topGlobalcont/topglobalCont_1-50.asphttp://no1construction.com/No1Data.htmTOWS Analysis, Source: http://www.mindtools.com/pages/article/newSTR_89.htmUnited Nations Principles for Responsible Investment (UNPRI), source:http://www.unpri.org/Vivas Lend Lease & Lend Lease Development. Victoria Harbour, Source:http://www.vivaslendlease.com.au/content.aspx?urlkey=ns_vicharbourhttp://www.bovislendlease.com/llweb/llc/main.nsf/all/news_20011212http://www.victoriaharbour.com.au/llweb/victoriaharbour/main.nsf/html/index?opendocumenthttp://www.bovislendlease.com/llweb/llc/main.nsf/images/pdf_ps_vic_harbour_project.pdf/$file/pdf_ps_vic_harbour_project.pdfWilhelm Schmeisser, Lydia-Claussen & Martina Lukowsky. Berliner Balanced Scorecard:The Employee Perspective. Textbooks for students www.bookboon.comWorld Construction Industry facts, source: http://www.economywatch.com/world-industries/construction/World Construction Industry details, Source: http://www.economywatch.com/world-industries/construction/world.htmlWorld Green Building Council, source: http://www.worldgbc.org/126 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • 9.1 AppendixMain Stakeholders participating in the Construction IndustryArchitectural firms, Structural Engineers, Mechanical Engineers, Electrical Engineers,Landscape architects, Interior designers, Environmental Engineers, civil engineering teams,general contractors, subcontractors, quantity surveyor, Design-build teams, projectmanagement teams, construction management teams, contract management teams, Facilitymanagement firms, Owners, Managers Associations, manufacturers, Governments,Municipalities, Cities, among others.Main services provided within the Construction IndustryCAD, Building Information Modeling, Project Management, Construction management,Structural design, Shop drawing, submittals, document management system, Presentations,Detail engineering, conceptual scheme, Discrepancy report, quantity estimate, reverseengineering, reliability engineering, area charts, code compliance analysis, as built drawings,material specification, construction documentation, accessibility compliance, recordsmanagement, energy audits, energy modeling, Landscape design, Site services, topography,among others.166166 Stakeholders in the Construction Industry,Source: http://en.wikipedia.org/wiki/Engineering_process_outsourcing#AEC_stakeholders127 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
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    • The CompanyAdditional list of Directors (Board)P. M. Colebatch (Non Executive), Age 64Mr. Colebatch joined the Board as a Chairman of the Personnel and Organization Committeeand a member of the Risk Management and Audit Committee in 2005. He has held seniormanagement positions in insurance and investment banking, and was formerly on theExecutive Board of Swiss Reinsurance Company, Zurich. He was previously on the ExecutiveBoard of Credit Suisse Group, Zurich, where he was Chief Financial Officer, and wassubsequently Chief Executive Officer of Credit Suisse Asset Management. In addition, he is aNon Executive Director of Insurance Australia Group Limited (appointed January 2007) and aNon Executive Director of Mann Group plc (appointed 1 September 2007). He holds aBachelor of Science and a Bachelor of Engineering from the University of Adelaide, a Masterof Science from Massachusetts Institute of Technology and a Doctorate in BusinessAdministration from Harvard University.G G Edington CBE (Non Executive), Age 63Mr. Edington joined the Board in 1999 and is a member of the Risk Management and AuditCommittee and the Sustainability Committee. Qualified as a Chartered Surveyor, he brings tothe Board extensive UK and international experience in the property sector. He was a Directorof BAA plc and Chairman of BAA International. He joined BAA plc. became a member ofthe Board and has been the Chairman of six BAA companies. He is a past President of theBritish Property Federation, was the Chairman of UK property company Greycoat EstatesLimited and was a member of the Bank of England Property Forum. Mr. Edington wasformerly Chairman of the Council of Trustees of the UK children’s charity, Action forChildren, and was awarded a CBE for ‘services to children’.P C Goldmark (Non Executive), Age 68Mr. Goldmark joined the Board in 1999 and is Chairman of the Nomination Committee and amember of the Sustainability Committee. He is a Director of the Climate and Air Program atEnvironmental Defense, a US-based non-profit environmental advocacy organization. He wasthe Chairman and Chief Executive Officer of The International Herald Tribune in Paris. Hewas the President and Chief Executive Officer of the Rockefeller Foundation in New York for10 years. He has held positions including Senior Vice President of the Times-MirrorCorporation, Executive Director of the Port Authority of New York and New Jersey, andDirector of the Budget for the State of New York. A writer and speaker on world affairs, Mr.Goldmark graduated with a BA from Harvard College, Government Department, magna cumlaude. He brings to Lend Lease his wide experience as a Chief Executive Officer and seniorexecutive in the private and public sectors, both in the USA and internationally.J A Hill (Non Executive), Age 63Ms Hill joined the Board in 2006. She is Chairperson of the Sustainability Committee and amember of the Personnel and Organization Committee. She has held a number of seniorexecutive positions in the land development and housing construction industry in NorthAmerica. She was formerly the Chairperson, President and Chief Executive Officer of Costain131 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Homes, Inc. (US) and Vice President and General Manager, Mobil Land (Georgia)Corporation. She has a Bachelor of Arts from the University of California at Los Angeles anda Master of Arts in marketing and management from the University of Georgia. Ms Hill is aNon Executive Director of Wellpoint, Inc. She was formerly a Non Executive Director ofResources Connection, Inc. She also sits on the Board of Directors of the Lord Abbett familyof mutual funds, which is the trustee of 31mutual funds of publicly held companies.D J Ryan AO (Non Executive), Age 57Mr. Ryan was appointed a Director in 2004. He is Chairman of the Risk Management andAudit Committee and a member of the Personnel and Organization Committee. He haspreviously held Managing Director positions in investment banking and industry, as well asbeing the Chairman or a Non Executive Director of a number of listed public companies. Hehas a Bachelor of Business from the University of Technology, Sydney and is a Fellow ofCPA Australia and the Australian Institute of Company Directors. He is Non ExecutiveChairman of Transurban Holdings Limited and ABC Learning Centres Limited. He is also theNon Executive Chairman of Tooth & Co Limited.132 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
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    • LEND LEASE GROUP (LLC: ASX)167FINANCIAL STATEMENTS FOR LEND LEASE GROUP (LLC)LAST A$7.16 AUD CHANGE TODAY -0.11 -1.51% VOLUME 1.7MAugust 11, 2010 9:50 AM ETYear over year, Lend Lease Group has seen net income shrink from a gain of A$254.2M to aloss of A$653.6M despite relatively flat revenues. A key factor has been an increase in thepercentage of sales devoted to the cost of goods sold from 94.81% to 96.62%.Although debt as a percent of total capital increased at Lend Lease Group over the last fiscalyear to 34.98%, it is still in-line with the Real Estate Management and Developmentindustrys norm. However, there are not enough liquid assets to satisfy current obligations.Accounts Receivable are typical for the industry, with 47.93 days worth of sales outstanding.Last, Lend Lease Group is among the least efficient in its industry at managing inventories,with 17.40 days of its Cost of Goods Sold tied up in Inventories.167 LLC Financial Analysis (Bloomberg),Source: http://investing.businessweek.com/businessweek/research/stocks/snapshot/snapshot.asp?ticker=LLC:AU138 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Lend Lease Property Value Chain.168Lend Lease Dividends Performance & Contribution from business units.169168 Lend Lease Property Value Chain.Source: http://www.lendlease.com/LLC_Annualrep/2009/value_proposition.html169 Lend Lease Dividends Performance & Contribution from business units.Source: http://www.lendlease.com/LLC_Annualrep/2009/value_proposition.html139 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
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    • In the News…Lend Lease restores balanceLend Lease will focus on its urban regeneration and development pipeline businesses in thecoming year, but warns that overseas construction markets remain under pressure.Business | Carolyn Cummins | Tue Aug 17 03:00:01 EST 2010Lend Lease profits upAustralias largest property developer Lend Lease Group has revealed a rise in profits butissued a word of caution on construction markets.Breaking News Business,Business,National | Mon Aug 16 09:02:11 EST 2010Lend Lease ups profit but remains cautiousAustralias largest property developer posts a profit turnaround but issues caution onconstruction markets.Business | Mon Aug 16 09:07:40 EST 2010Lend Lease in the hunt for Valemus after $1.3bn plan abandonedDeveloper Lend Lease is being touted as a potential buyer for the Valemus business,following the decision to withdraw planned $1.3 billion float by German parent BilfingerBerger AG.Business | Carolyn Cummins | Wed Jul 07 03:00:01 EST 2010Meanwhile, back at the Hughes tranchePhoton Groups ousted executive chairman, Tim Hughes, has been forced to practise what hepreaches in the fine art of deferring earn-out payments.Business,Opinion | CBD | Wed Aug 18 03:00:01 EST 2010Lend Lease finalises London projectLend Lease finalises an agreement with the London Borough of Southwark for the $2.7billion urban renewal of Elephant and Castle in Londons west.Breaking News Business,Business,National | Thu Jul 08 09:49:39 EST 2010Lend Lease set to snare Singapore siteDeveloper Lend Lease says its the highest bidder for a prime Singapore development site, in"an important strategic transaction".Breaking News Business,Business,National | Fri Jun 25 08:50:50 EST 2010Lend Lease prices offer at steep discount152 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Property developer Lend Lease moves to fund new projects and stave off a downgrade of itsdebt ratings.Business | Thu Feb 25 08:55:31 EST 2010Lend Lease formalises $2.5b Ekka projectLend Lease has signed a project development agreement that formalises its $2.5 billionproposed redevelopment of Brisbanes Ekka showground.Breaking News Business,Business,National | Wed Jun 30 14:38:12 EST 2010Lend Lease confirms guidanceDeveloper Lend Lease Group has confirmed its earnings guidance and says its well placed forgrowth.Breaking News Business,Business,National | Thu May 27 10:50:33 EST 2010Lend Lease dodges ratings downgradeLend Leases $800m-plus equity raising gets a tick from a credit ratings agency, avoiding anunsightly downgrade.Business | Adele Ferguson | Thu Feb 25 16:14:33 EST 2010Lend Lease signs $3.3b London dealLend Lease has signed a joint-venture agreement worth a potential £2 billion for the plannedregeneration of land next to its 2012 Olympics athletes village in London.Business | Carolyn Cummins | Wed Apr 07 03:00:01 EST 2010Four new chiefs for Lend Lease in global shuffleProperty developer Lend Lease appoints four international chief executives as the companymoves to a business structure based on regions.Business | Carolyn Cummins | Wed Apr 28 03:00:01 EST 2010Lend Lease appoints Robert McNamara CEOProperty company Lend Lease Group has appointed Robert McNamara as chief executive ofits American division.Breaking News Business,Business,National | Mon Mar 22 12:20:43 EST 2010Lend Lease WTC class action settledProperty developer Lend Lease said a US class action against a subsidiary filed by workers onthe World Trade Center clean-up site in New York had been settled.Breaking News Business,Business,National | Fri Mar 12 14:33:59 EST 2010Lend Lease ties up $434m capital raising153 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
    • Lend Lease Group has raised $434 million through a new security sale after institutionalsecurity holders subscribed for 87 per cent of entitlements.Breaking News Business,Business,National | Mon Mar 01 13:41:16 EST 2010Lend Lease to raise $806m to fund growthLend Lease Group has forecast a similar full year profit to the last financial year and launcheda $806 million capital raising to fund growth opportunities.Breaking News Business,Business,National | Thu Feb 25 10:52:33 EST 2010Lend Lease plans to buy Channel 9 siteLend Lease has conditionally agreed to buy a parcel of land in Melbourne currently occupiedby GTV Channel 9.Breaking News Business,Business,National | Wed Feb 24 13:34:59 EST 2010Lend Lease signs $6b Barangaroo contractThe Lend Lease Corporation has formalised its contract with the NSW government for the$6b development of Sydneys Barangaroo harbour-front site.Breaking News Business,Business,National | Fri Mar 05 17:41:15 EST 2010Source: http://www.theage.com.au/execute_search.html?text=lend+lease&ss=theage.com.au154 AN ANALYSIS OF TRENDS AND OPPORTUNITIES IN THE PROPERTY INDUSTRY
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