China Corporate Real Estate Trends 2015

CHINA Corporate Real Estate – Leading at the Speed of Change

0

Americas

EMEA

Asia

Pacific 44%

20%

36%

total respondents 544

countries 36

companies

represented 350+

1

The third biennial JLL Global CRE Survey

Note: Region % is based on location of person responding

total respondents 43

domestic corporates 63%

MNCs 37%

The China edition of CRE Survey

2

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.

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

THEME 1

EVOLUTION

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)

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%

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

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

10

THEME 2

EXPECTATIONS

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%

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%

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)

THEME 3

INTEGRATION

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)

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)

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)

Advancing from good to great

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.

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

THANK YOU