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Peggy Sito

Lured by fast-growing economies, London's top fitting-out contractor seeks to expand regional presence

The robust outlook for office markets in Asia has lured London's biggest interior fitting out contractor to plan a concerted push in the region through organic growth and mergers and acquisitions.

ISG InteriorExterior, which has a 30 per cent share of fit-out work in the London office market, said it has decided to accelerate  its expansion plans  in the region,  including the  fast-growing Chinese market  in the hope of repeating its London success  in Asia.

'There will be a combination of  growth strategies: through organic growth and acquisitions  when good opportunities arise,' said Tim Threlkeld, country director of ISG Asia (Hong Kong).

This month, the London-based contractor will complete the acquisition of the remaining shares in ISG Asia Interior held by Kumpulan CityAxis,  which moved away from fit-out work and into property development. ISG InteriorExterior has had a 22 per cent stake for five years.

Mr Threlkeld said  the company would use ISG Asia as a springboard to expand its business in the region.

As part of ISG Asia's role  in providing fit-out services  the company also ensures that designers' work  is delivered on time.  The company's close watch on interior designers' and construction firms' schedules  helps clients better manage timetables  and save costs.

ISG Asia, which  employs 337 people, made a #457,000 (HK$7 million) pre-tax profit on #35 million  turnover last year.  Clients include financial companies JP Morgan, Credit Suisse, Bank of China, and retailer Lane Crawford and Nokia. It also secured a fitting-out contract for Pacific Century Premium Developments' club house in the Bel-Air on the Peak development in Cyberport.

Mr Threlkeld said it was a  good time to expand in Asia, where office markets are on an upward cycle and many projects are being built.

The growth of the Hong Kong economy has led to a low vacancy rate in office space in Central as financial companies expand and lease more office space.

As rentals increase, some existing clients  have moved to cheaper premises.  Both the higher demand in Central and company moves  to other districts have created business opportunities, according to Mr Threlkeld.

In Singapore, where the government is  increasing  its efforts to promote the city as a financial and tourist hub,  opportunities are also being created.

ISG Asia recently  won a contract to ensure  on-time delivery of Deutsche Bank's 280,000 square foot Asia-Pacific headquarters  in Singapore.

It also has secured the construction management contract of the Manhattan two-tower luxury residential project  in Macau.  The property development is owned by MacauLand and Citigroup Property Investors.

In China, Mr Threlkeld said ISG Asia  has projects in Beijing, Tianjin, Shenzhen and Guangzhou. It has an office in Shanghai.

The company also plans to expand into second-tier cities such as Chengdu, Suzhou and Chongqing, he said, adding  that mainland markets  offered great growth potential.

'Opportunities in a growing market are greater. A fitting-out company has a happier time in a fast-growing market like China,' he said.

However,  Mr Threlkeld admitted that competition was keen.

In Hong Kong, fitting out contractors  have close connections to landlords or developers and that makes it difficult for individual companies to gain new work.

One of the leading  fitting-out companies in Hong Kong is Pat Davies, which is part of Shui On Group.

Many tenants might not employ fitting-out contractors to monitor the implementation of interior fitting-out work. Instead, interior designers would  perform that role.



ISG InteriorExterior aims to ride buoyant Asia office sector