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Journalism of Courage
The impact of the global meltdown, which is gradually being felt on Indian shores, will further affect the already-declining demand for on commercial real estate market in India.
According to a report by Jones Lang LaSalle, several multinational occupiers in Asia, who were optimistic about their expansion plans at the beginning of the slowdown, are now planning to go slow on their expansion plans.
The report is based on a survey of 30 leading multi-national companies carried twice8212; one at present and the other seven months ago8212; when the Asian economy had begun to brace itself for the impact of the subprime crisis.
These companies together occupy 200 million sq ft of space in the continent. Still very buoyant about the market, more than 40 per cent of MNCs had said they would expand their presence in Asia. However, seven months down the line more than 50 per cent of the MNCs that were once looking at aggressive expansion, have said they will 8220;now grow less in the region than they had previously intended8221;.
The companies surveyed are mostly those from the financial services industry, technology sector and consumer goods/manufacturing sector. The report stated that by the time the second survey was carried out, 8220;one international bank said it was too buffeted by the current turbulence to have any clarity of planning. The other8212; a financial services firm8212; no longer exists as a going concern.8221;
According to Anuj Puri, chairman and country head, JLLM, the corporates surveyed were those with a very strong presence in Asia, the purpose being understanding their appetite for Asia as a market.
8220;The good thing is they have not written Asia off. Though the growth will be muted, commercial real estate can find solace in the fact that most companies might look at shifting their back office work that occupies more space than front office, to India as a cost cutting measure,8221; said Puri.
Only 15 per cent of the companies surveyed said that they would grow more than previously planned. However, the report clarified that in 8220;all of these cases, off-shoring was the principal driver of the incremental growth, not market opportunities.8221;
