Trend 5: Failure to deliver in emerging markets will become one of the greatest reputational risks for corporate real estate (CRE)

CRE remains tasked to deliver operational platforms in select growth markets that will be central to driving corporate competitiveness.

Senior leaders will demand speed and quality of delivery in emerging markets that are opaque and operationally challenging. Time and costs can escalate rapidly, while the quality of the real estate solution may be compromised. The often-underestimated drain on resources and skills can put the internal reputation of CRE at risk.

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TREND 5 KEY FINDINGS

  • The dual emphasis on building operational platforms in emerging growth markets and right-sizing portfolios in mature or developed markets continues, as identified in our 2011 report on global corporate real estate trends.
  • Portfolio sizes in developed western economies will flat-line or reduce in volume, with more companies anticipating a decrease in portfolio size than those anticipating an increase.
  • Portfolio growth will be strongest in the world’s emerging economies, which also tend to be the least transparent real estate markets. Operating in these opaque environments represents a potential reputational risk to CRE over the next three years.
  • There is a real danger that the pursuit of growth and need for competitive advantage in emerging markets will lead to unrealistic demands being placed on CRE teams.
  • The task of delivering new operational platforms in emerging markets has been underestimated by CRE leaders. Platform-building in emerging markets can rapidly erode CRE team capacity and divert resources from meeting their broad and extended agenda. Managing expectations and educating senior leadership will be crucial.
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Risk: Damaging reputation through delivery failure

Key Statistics

Perceived challenges of platform delivery in emering markets

Time likely to be spent by CRE on emerging markets over the next three years

Net portfolio growth anticipated over the next three years

Global real estate transparency 2012

Increasing demands on real estate vary in intensity between developed and emerging countries