Archive for the ‘Japan’ Category

CRE Outsourcing Is Becoming An Option In Japan

Wednesday, May 29th, 2013

Today, only 18% of Japan companies do not outsource any kind of Corporate Real Estate (CRE) services according to JLL’s Japan CRE Survey 2013. This is compared to 8% globally who do not outsource any kind of CRE services, according to JLL’s Global CRE Survey 2013, showing a tremendous drop compared to the 24% of two years ago.

Among Japanese companies that do outsource part of their CRE delivery, attitudes are very polarised. More than half of respondents (55%) agree that outsourcing represents a strategic relationship. Although this is less than the global average (63%), it is one of the bullish findings of the survey that so many respondents demonstrate a strategic approach to outsourcing and assess partnership value over the long term. At the opposite end of the spectrum, more than one third of respondents in Japan (34%, vs. 15% globally) approach outsourcing as a tactical transaction done with the lowest-cost supplier.

CRE outsourcing is becoming an option in Japan

Question: Please rate your current attitudes towards outsourcing on a scale of 1 to 5, where 1 means that outsourcing represents a tactical transaction, mainly with the lowest cost supplier, and 5 means that outsourcing represents a strategic relationship.

Source: Jones Lang LaSalle, Changing Winds Ahead. Japan Corporate Real Estate Trends, 2013

However polarised, survey findings are showing that today, in Japan, CRE outsourcing is maturing at a faster pace than might be expected in a country with such a reluctant outsourcing culture. The drive towards outsourcing can be attributed to a combination of factors such as the towering strategic agendas placed upon CRE teams. These come in addition to existing in-house capacity challenges and skills gaps across the industry.

Companies in Japan do not feel bound to follow traditional paths towards outsourcing. Those with already some CRE outsourcing experience continue to adopt industry best practices, seeking innovative delivery models that harness greater strategic contributions. They are being joined by another generation of companies new to outsourcing. Whilst some of them are starting with tactical out-tasking, others are leapfrogging and advancing at a much faster pace. Early and late adopters alike demonstrate a clear willingness to take different paths towards strategic outsourcing, such as joint ventures created with external partners.

Drilling further into survey responses, we see that the changing balance between in-house and outsourced delivery varies significantly depending on the types of services. The control of specialist and resource-intensive services such as project management is easier to relinquish, while sensitive services such as portfolio strategy are more likely to be retained within the organisation.

Over the next three years, we can expect further development along the outsourcing continuum in Japan. CRE teams will look for more support from the market in order to fulfil their increasing tactical and strategic agendas. Drawing a line in the sand, JLL’s Japan Corporate Real Estate Index 2013 highlights a gap between Japanese and global companies’ CRE maturity that is expected to narrow in the near future.

About the author
Anne Thoraval is a Director in charge of Corporate Research Asia Pacific.

In Disaster-prone Asia Pacific, Preparation Is Key

Friday, March 23rd, 2012

“The Wise Rabbit sat under a tree and pondered about life in general. ‘The world is full of difficulties and dangers. First, there are natural catastrophes such as earthquakes and landslides and storms. Second, there is always the danger of famine, of shortage of food and water. Third, there is the danger of thieves and robbers.’ He then remembered an important appointment and went away.” – Maung Htin Aung, Burmese folktales, 1948

APAC has endured extensive natural disasters historically, and those in recent years have devastated surrounding communities, severely impacted companies’ operations and negatively affected national GDPs.

Drawing on the collective experience of 200 Jones Lang LaSalle client sites affected in Christchurch, Brisbane, Queensland, Japan and Thailand in 2011, Surviving the Disaster Zone: Lessons Learned in Asia Pacific explores what has worked well in preparation for and during a crisis. The author, Rob Timmermans, highlights the best practice during each phase of an incident:

  • Preparation. When a hazard warning is issued in advance, convene a crisis management team and consider what can be done to minimise the impact, for example taping up windows, sandbagging or ordering portable generators. Involve service providers early to ensure critical resources are on standby when needed.
  • Event. During the down time when all preparations have been made and yet people are not able to commence recovery efforts, focus should be on people’s safety and managing the physical and psychological impacts on staff. Appoint a single point of contact for staff and provide timely updates using all available communications channels (including social media).
  • Recovery. In the aftermath of the event, the priority is to ensure facilities are safe and/or to identify short-term alternative space. Nominate the corporate real estate team as the ‘authority’ in declaring a facility safe to occupy following a disaster.

Beyond these tactical learnings, it is critical to have strong business continuity plans (BCPs) in place. Rob advises to:

  • • Incorporate standard management practices into the plans as employees will be far better equipped to make swift and relevant decisions if they are in line with their day-to-day responsibilities.
  • • Look beyond traditional stand-alone BCPs and integrate off-site options such as the ability for staff to effectively work from their homes using broadband technology, allowing many functions to be executed without interruption.
  • • Opt for geography-specific approaches for back-up sites. Natural disasters have an impact will beyond the immediate surroundings so it is important to consider inter-state or offshore location options for back-up operations.
  • • Schedule BCP trials when some key members of the crisis team are not available, as will most likely be the case when a crisis hits. This will demonstrate wether the support network is capable or flawed.
  • • Build pre-emptive BCP relationships between CRE teams and service partners or between landlords and tenants, to streamline negotiations and deployment of resources during time-critical periods.

Fortunately, unlike the not-so-wise rabbit in my introduction, firms across the region are now proactively reviewing BCPs, a task no longer seen as a mere box-ticking exercise.

About the author
Anne Thoraval is the Head of Corporate Research for Jones Lang LaSalle in APAC, based in Singapore.

Are There Storm Clouds On The Horizon?

Thursday, March 15th, 2012

At a first glance, taking a look at the recent Asia Pacific GDP growth statistics you could be forgiven for thinking that there are storm clouds on the horizon. Across the board, since September last year all the major countries in AP have had their GDP forecasts revised downwards.

Looking at China, the market pundits are certainly flapping! The “engine of world growth,” announced just last week that they are lowering their growth target for 2012 – 7.5% versus the usual 8%! Also, the import numbers released certainly took commentators by surprise. China imports outstripped exports by a not unsubstantial US$31.5bn, the biggest trade deficit since 1998, not insignificant in an export led economy like China.

Should the alarm bells be ringing and should AP real estate investors be concerned?! Let’s ignore headline grabbing sound bites and cut to facts. The bottom line is AP aggregate GDP growth is actually set to increase over 2012. Regional growth in 2012 will improve on the back of increased growth rates in Japan and China. In China we expect to see fiscal and monetary policy stimulating the economy, whilst in Japan rebuilding activities post last years earthquake will help to improve the economic outlook.

For investors, the rest of 2012 is likely to bring good opportunities to acquire assets. The Japanese market in particular is certain to present interesting options. At the height of the GFC downturn, we initially expected to see a number of distressed Japanese assets getting pushed onto the market, but that just didn’t happen, banks were more lenient than expected and rolled over loan covenants to accommodate their borrowers. However, now that we’re seeing conditions improving, we do expect to see these banks starting to put more pressure on their borrowers to push these out to the market and these assets will present excellent opportunities for the cashed up international investors.

Asia Pacific is interesting for international investors because it offers a good balance of opportunities. For Core investors, transparent mature markets such as Australia and Singapore are available to tap into, whilst Hong Kong still remains attractive, all be it that year to date it’s been a very locally driven investment market. On the flipside, more interesting opportunistic high yielding plays are there for the taking in the fast growing but opaque markets of Indonesia and Vietnam.

To sum up, are there storm clouds on the horizon? Well, if you’re sitting in Asia Pacific, I suggest you pull up a deck chair and enjoy the weather. For those investors in a strong position, the opportunities and growth in 2012 will very much be there for the taking. If international real estate investors are to deliver the types of returns their unit holders are looking for, with snail pace economic growth in EMEA and a sluggish America, investors will need to look to Asia Pacific real estate to deliver their numbers and now’s a pretty good time to be doing so.

About the author
Roddy Allan is a Director, Asia Pacific Research for Jones Lang LaSalle, based in Hong Kong.