Risky Business: 12 surprising facts about construction in emerging markets

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Understanding local market nuances is critical to the success of any construction project. Here are some things you need to know when managing real estate projects
in Asia’s emerging markets.

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Risky Business: 12 surprising facts about construction in emerging markets

  1. 1. Construction Management Risky Business: 12 Surprising Facts About Construction in Emerging Markets Understanding local market nuances is critical to the success of any construction project. Here are some things you need to know when managing real estate projects in Asia’s emerging markets. CONSTRUCTIONGROWTH 9/10 countries with the strongest net portfolio growth forecast are emerging markets 44% 38% 31% 12% 20% 13% 16% 11% 8% INDIA TURKEY RUSSIA BRAZIL UAE MEXICO SAUDI CHINA SOUTH AFRICA ARABIA 5% 1% AUS US -12% UK The top 8 countries for net portfolio growth are 2-3 times less transparent real estate markets than mature economies, such as the US, UK and Australia In Mumbai demand for space in the key CBDs is very strong and Grade A office stock will more than double by 2020 China’s 4 largest cities will see construction of 178M sq ft of Grade A office space by 2020 that’s equivalent to 83 Empire State Buildings x 83 WHERETHINGSGOWRONG fluctuation in material pricing 40 - 50% in US = construction projects running over time or budget VS. most common cause of cost over runs in Malaysia 92% in Malaysia Smells associated with paint, new furniture and glue can cause significant delays when handing over projects in China Difficulties importing and delivering construction materials to site can cause significant delays in Vietnam and Indonesia PROJECTSTAKELONGERANDCOSTMORE It takes 5 times the number of procedures to build a warehouse in India than in Hong Kong Hong Kong 6 vs. India 35 India 7.6% Indonesia 4.9% Vietnam 6.9% Disputes on projects in India can take more than 4 years to be resolved from filing a suit to recieving a payment High price inflation forecasts continue to push up construction costs across Asia Asia Pacific 3.5% Australia 2.6% Japan 2.1% $ $ The cost of trade contractors can be up to 8 times more expensive in China than in Singapore USD 21.9/hr USD 2.8/hr Do you know what’s really going on? www.jll.com © Jones Lang LaSalle 2013 Jones Lang LaSalle, Global Corporate Real Estate Trends. 2013 Jones Lang LaSalle, Global Real Estate Transparency Report, 2012 Jones Lang LaSalle, Real Estate Intelligence Service, 2013 Construction Management Association of America, Annual Survey of Owners, 2009 International Journal of Advances in Applied Sciences (IJAAS), March 2012 Canadian Center of Science and Education, Relationship between factors of construction resources affecting project cost in Malaysia, 2013 The World Bank, Global logistics performance index, 2012 The World Bank, Doing Business, Dealing with Construction Permits, 2013 The World Bank, Doing Business, Enforcing contracts, 2013 Deloitte, 2013 Global Manufacturing Competitiveness Report, 2013 IHS, Data Insight 2013, consumer price inflation, annual growth

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