In many sectors, the need to establish a
physical real estate presence overseas
has never been greater. Improved technologies and efficiencies have made the
world a bazaar of economic activity and
those without an international presence
may be missing out on valuable opportunities.
“If you are in certain businesses such as
communications, financial services, or the
technology industry, you either have a
global presence or your competition is
passing you by,” says Ken Murawski, managing director of CB Richard Ellis.
Smart Business spoke with Murawski
about the importance of establishing an
international presence, how to decide
between owning and leasing commercial
real estate overseas and what types of services a quality real estate professional can
bring to the table.
Why is establishing an international presence so important in today’s marketplace?
As we all know, the world has gotten
much smaller over the past several
decades as technology has progressed.
Many companies today feel that in order to
service their clients as they expand internationally, they too need to establish or
expand their physical presence overseas.
In the commercial real estate business,
having people on the ground in such areas
as India, China and Europe has allowed us
to service our clients appropriately in those
marketplaces as well as increase our own
profitability.
Many of our clients have recognized the
vast opportunities that exist for them in
emerging marketplaces and want to participate in the expected growth, which is
anticipated to be much greater than their
existing market. I don’t think this trend will
slow down for quite some time, if ever.
What factors should be considered when
deciding between owning and leasing commercial real estate overseas?
The answer to this varies from market to market. In some countries, the decision to
lease versus own is a similar decision
process to leasing or owning in the United
States, meaning it is, in most instances,
based upon a company’s cost of capital.
However, in China where the government
owns the land, owning in the traditional
sense is not an option. Doing business can
vary greatly from market to market due to
cross-cultural differences so it is very
important to have local expertise and local
influencers on your team if you are looking
to enter a new market.
How should a company proceed when purchasing real estate internationally?
I think that anyone working to lease,
build or buy commercial real-estate internationally absolutely needs to engage the
services of qualified professionals in the
specific marketplace they want to be in. If
it is a United States company that doesn’t
have a qualified real estate service partner,
they need to start locally by contacting a
commercial real estate services firm with
true international capabilities. This allows
the U.S.-based real estate professionals to
get a clear understanding of the company’s
needs and make the proper introduction to their foreign partner to ensure the client is
in good hands and that any cross cultural
differences are addressed.
What type of services does a quality international real estate professional bring to the
table?
A quality professional representing a
company that is looking at going international will always connect with local associates in specific foreign markets to ensure
that they have accurate, current data as
well as an understanding of such things as
political climate, cultural differences,
taxes, incentives, etc. The professional
would bring high level analytical and financial capabilities, as well as a team of other
professionals with expertise in such areas
as project management, facilities management, transaction management, all with
experience in the target market. It all
depends on the nature of the assignment,
but having all these service capabilities can
be critical.
What does the current environment look like
for international real estate?
It varies greatly by country and region.
We are seeing many U.S.-based companies,
particularly manufacturing companies,
looking to the Asia Pacific area to establish
an operating presence. With the political
climate changing in China, it is an
"untapped" market in many respects and
given the vast population there, it offers
huge growth potential for US companies.
KEN MURAWSKI is managing director of CB Richard Ellis
Cincinnati. Reach him at (513) 369-1349 or
[email protected].
