CBRE says more domestic companies now using property services firms
Virginia Huang, its managing director of advisory and transaction services in Greater China, has noticed a strong industry shift, as major global real estate service agencies are forced to fight harder than ever for Chinese customers
The client bases of global real estate service agencies operating in China are now being filled with more domestic names, rather than what was for years their traditional core sources of business, foreign-funded corporations, according to the managing director of advisory and transaction services, for CBRE Greater China.
Virginia Huang says major Chinese corporations now take up more than 60 per cent of the prime office space being leased in China’s top-tier cities, up from almost none two decades ago.
“The change began after the global financial crisis, and has accelerated since 2011,” said Huang, a 20-year property leasing industry veteran.
“This year has seen a particular shift as major global real estate service agencies in China compete vigorously for Chinese customers.
“It is largely happening on the demand side, while on the supply side Chinese developers and investors have traditionally prevailed.”
More major Chinese firms, particularly technology companies, are increasingly willing to hire professional service companies to manage their leasing activities and office facilities, and have become the largest new business stream for speciality real estate service providers.
As a result, her own firm CBRE, Savills and JLL, for instance, have all been promoting themselves and repositioning their businesses as agencies that know exactly what are the local demands of Chinese clients.
Even a decade ago, Huang says, these types of international firms were primarily serving foreign companies operating in China, who have always been more willing than their Chinese peers to outsource workplace management and property-related services.
But that situation is rapidly changing, with Huang’s growing number of Chinese clients being seen to appreciate the benefits and importance of what she calls “going professional”.
The situation has meant too, that the foreign agencies are now having to fight for staff as the segment grows and more Chinese property firms come into the market. Poaching of staff has become common practise, she adds.
“Since the start of this year, particularly, I have the acute feeling that our battleground in China has shifted.”
Amid the heated competition, CBRE has just struck a three-year contract with one NASDAQ-listed Chinese technology company for lease management of its China property portfolio, with the firm also provided workplace strategy services for its assets overseas too.
Huang said a common problem among Chinese technology companies, particularly, is that as they have grown they have found it increasingly hard to find the property they need.
She said in their business plans, many haven’t given enough thought to office leasing or building needs.
Of course, for the property management sector, she admits, it’s a “happy problem” that the rise in headcounts is faster than office supply.
CBRE recently completed its “China Occupiers Survey” based on 120 responses from corporations, to try and gauge corporate preparedness when it comes to their property needs.
The study found that while a majority of Chinese occupiers still see their property management branch as a “cost centre”, some leading companies increasing view it as an important consideration when it comes to attracting the best staff, and its overall business development strategy.