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China Corporate Real Estate Trends 2015


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Leading at the Speed of Change
China Corporate Real Estate Trends 2015 reveals that China’s CRE function is continuing to mature toward a strategic and business-driven role. Find out more at:

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China Corporate Real Estate Trends 2015

  1. 1. China Corporate Real Estate Trends 2015 CHINA Corporate Real Estate – Leading at the Speed of Change 0
  2. 2. Americas EMEA Asia Pacific44% 20% 36% total respondents544 countries36 companies represented 350+ 1 The third biennial JLL Global CRE Survey Note: Region % is based on location of person responding
  3. 3. total respondents43 domestic corporates63% MNCs37% The China edition of CRE Survey 2
  4. 4. 3 A broad range of industries represented EDUCATION 7% ENERGY 7% REAL ESTATE 7% TECHNOLOGY, MEDIA, AND TELECOMMUNICATIONS 39% MANUFACTURING AND INDUSTRIAL 23% BANKING AND FINANCIAL SERVICES 33% PROFESSIONAL SERVICES 9% OTHERS 15% CONSUMER PRODUCTS 21% RETAIL 14% Note: Does not add to 100%; respondents could select more than one sector.
  5. 5. 4 Three key themes emerged from the survey China’s CRE teams are evolving into more strategic and business-driven roles, with growing levels of interaction with both the C-suite and procurement. 1 EVOLUTION China's CRE profession matures since 2012, keeping pace with global trends Chinese CRE teams are seeing growing senior leadership engagement in their work - although more is needed - with demands increasing across a range of tactical and strategic tasks. 2 EXPECTATIONS CRE expectations and demands: Leapfrogging ahead Both domestic and MNC CRE teams in China perceive a need for improvement in their internal relationships with other departments and with business leaders. 3 INTEGRATION Integration with other functions, business units offers an opportunity to strengthen CRE Next steps: Forward thinking is the key to advancing China’s CRE function. Advancing from Good to Great
  7. 7. 6 Compared to 3 years ago, how would you assess the strength of the CRE team’s mandate? Note: Total may not add to 100% due to rounding. The majority of CRE teams in China are experiencing a strengthening mandate Base: 491 (Global); 43 (China); 17 (MNC); 26 (Domestic)
  8. 8. 7 Both MNCs and domestic CRE teams are becoming more centralized in terms of reporting lines To what level of the organization does the global head of CRE/CRE leader currently report? (only includes companies who have a global head of CRE) Note: Total may not add to 100% due to rounding. Base: 453 (Global); 38 (All China); 17 (MNC); 21 (China Domestic) Global All China MNC China Domestic 0% 20% 40% 60% 80% 100% C-suite (i.e. CEO, CFO, CIO, COO) Managerial level (i.e. President, VP, Manager) Executive level (i.e. Officer, Executive, Supervisory level) Operational level (i.e. Administrator, clerk) 57% 82% 71% 90% 23% 11% 18% 5% 16% 8% 12% 5% 3% 0% 0% 0%
  9. 9. 8 More than one-third of CRE teams view outsourcing as strategic and focused on long-term value Please assess how strategic CRE outsourcing is to your firm. Note: Total may not add to 100% due to rounding. Base: 422 (Global); 38 (All China); 23 (China domestic) (only companies which outsource) 0% 20% 40% 60% 80% 100% Global All China China domestic 25% 26% 17%17%4%30%30% 13%18%21%21% 24%22%16%12% Outsourcing decisions are tactical and focused on short-term cost savings Outsourcing decisions are strategic and focused on long-term value
  10. 10. 9 The biggest drivers for outsourcing in China are heavily strategic in nature What are the drivers for outsourcing CRE activities in your organization?. Note: Total may not add to 100% due to rounding. Base: 40 (All China); 16 (MNC); 24 (China Domestic) All China MNC China Domestic Productivity improvement Cost savings Supporting an Initial Public Offering (IPO) Lack of skills and knowledge in-house 0% 20% 40% 60% 80% 100% 78% 88% 71% 65% 56% 71% 58% 75% 46% 55% 38% 67% 10% 0% 17% Refocusing in-house CRE resources on more strategic activities
  12. 12. More strategic services and capabilities are increasingly demanded from leadership, particularly in domestic companies 11 How are the demands of senior leadership/C-suite on the CRE team changing in terms of the following areas related to alignment of CRE with the firm’s strategic priorities? Note: Total may not add to 100% due to rounding. Global All China MNC China Domestic 0% 20% 40% 60% 80% 100%0% 20% 40% 60% 80% 100% Presenting scenarios and solutions to the business on demand Aligning CRE with business drivers and functional areas (HR, IT, Finance) Driving the corporate sustainability /CSR agenda Bringing more flexibility to the leasehold portfolio Base: 491 (Global); 43 (China); 17 (MNC); 26 (Domestic) 51% 67% 53% 77% 64% 74% 81% 70% 65% 75% 76% 74% 57% 59% 76% 45% Delivering a platform for growth in select markets Attracting and retaining talent Supporting cultural change Enhancing the productivity of the real estate portfolio Enhancing flexible (remote, mobile) working 48% 46% 53% 41% 56% 60% 47% 70% 59% 58% 59% 57% 75% 77% 76% 77% 62% 65% 82% 52%
  13. 13. 12 Expectations for productivity outcomes are higher than we see globally What are your company’s expectations from CRE around the following productivity outcomes? % reporting high expectations Note: Total may not add to 100% due to rounding. Base: Improve asset productivity: 269 (global); 30 (China); 17 (Domestic) Improve workplace productivity: 274 (global); 31 (China); 18 (Domestic) Improve business productivity: 271 (global); 30 (China); 17 (Domestic) Improve people productivity: 275 (global); 30 (China); 17 (Domestic) Improve asset productivity Global All China China Domestic Improve workplace productivity Improve business productivity Improve people productivity 0% 20% 40% 60% 80% 100% 61% 67% 82% 76% 81% 78% 60% 63% 76% 60% 70% 76%
  14. 14. 13 Over two-thirds Chinese CRE teams report a mature, transformative sustainability strategy How would you rate the maturity of your firm’s sustainability strategy? Note: Total may not add to 100% due to rounding. Base: 491 (Global); 41 (China)
  16. 16. 15 Integration across the business is viewed as the greatest weakness of Chinese CRE teams How does your CRE team perform relative to the following attributes? Note: Total may not add to 100% due to rounding. Base: 43 (China); 26 (China Domestic)
  17. 17. Similarly, lack of c-suite commitment, and integration are viewed as the biggest constraints to CRE in China 16 In your opinion, what are the top three constraints that are hindering CRE from enhancing itself as a strategic value-add to your organization? Top ranked answer, % Note: Total may not add to 100% due to rounding. Base: 491 (Global); 43 (All China); 26 (China Domestic)
  18. 18. 17 One-fifth of respondents in China report being ill-equipped to meet demands from leadership How well-equipped do you feel to meet the changing demands? Note: Total may not add to 100% due to rounding. Base: 476 (Global); 41 (All China); 25 (China Domestic)
  19. 19. Advancing from good to great
  20. 20. To advance from good to great, China’s CRE teams should focus in a few key areas 19 Obtaining greater senior management backing. 1 Improving data and analytics capabilities. 2 Continue making the case for using outsourced service providers to supplement in- house capabilities. 3 Improving their general business skills and building stronger relationships with internal leaders are critical goals that can help overcome the lack of sustained C-suite commitment seen as a top constraint by China’s CRE teams. With enhanced data and analytics capabilities, China’s CRE teams undoubtedly will be better positioned to demonstrate forward thinking, and could use predictive analytics to present persuasive, fact based innovations to senior leadership. Overcoming lack of trust and perceived value of outsourced services will require new processes for assessing providers, as well as requiring CRE service providers to adjust their offerings and capabilities to match the needs and preferences of this growing market.
  21. 21. 20 Additional tactical steps to strengthen CRE in China Hiring and training CRE staff with strategic thinking and business skills that encompass knowledge of finance and other business areas; Hiring and training for the ability to assess and manage external vendors, and to help vendors become more effective at operating within China’s unique business environment; Prioritizing people and people skills, to further engagement with business unit leaders; Creating a strong data and analytics platform to bring science to long-term strategy and everyday delivery, and to present data-driven, innovative ideas to senior leadership; Defining success and benchmarking progress and position relative to peers Leveraging vendors not only for tactical execution, but also to extend strategic capabilities such as data and analytics and to gain access to global best practices in CRE. 1 2 3 4 5 6
  22. 22. THANK YOU