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Banks to Expand Real Estate Footprint in China, India and Right-size in North America in Next Five Years

Survey reveals worker mobility programs, expansion in emerging markets present the greatest profit-generating opportunities

Corporate real estate (CRE) executives in the banking industry are seizing upon robust growth opportunities in China and India, and at the same time right-sizing their North American portfolios to support worker mobility programs, according to a survey conducted by Jones Lang LaSalle.

The survey was administered to seven leading U.S. banks and financial services firms representing USD 2,500 billion in total assets under management and employing approximately 170,000 employees across the U.S. and Canada, and found that strategic CRE portfolio management has the potential to positively impact financial pressures.

Iain Mackenzie, head of Jones Lang LaSalle’s Banking Industry Group in Asia Pacific, said: “A geographic rebalancing is taking place. Banking and finance companies are simultaneously controlling costs, especially in mature markets, and expanding in developing countries with bright growth prospects and intensifying competition.”

Key findings of the banking survey include:
• South Asia (primarily India) and North Asia (primarily China) will present the banking sector with the most attractive growth opportunities by 2020.

• More than 40 percent of respondents expect between 16 to 30 percent of their U.S. workforce to be enrolled in a mobility program by 2013, a trend that has the potential to increase employee engagement while lowering operating costs.

• Managing total occupancy costs, increasing the flexibility of their portfolio and increasing space utilization rates all cited as top real estate priorities.

India, China remain key expansion targets
When asked whether the banking sector will see contraction or growth over the next 12 months, all respondents said they expect slow to modest growth, albeit at levels less than two percent.

As banking executives create strategies around their future real estate growth plans, geography will play a significant role in the equation, with emerging markets earmarked to experience the strongest growth trajectory. South Asia (primarily India) and North Asia (primarily China) will present the banking sector with the most attractive growth opportunities by 2020, according to the survey. In the near term, most of the respondents plan to downsize their footprints in North America.

These survey results mirror the findings of Jones Lang LaSalle’s Global CRE Survey 2011, where 78 percent of respondents from banking and finance companies said that growth will be the biggest influencer of CRE strategy in Asia within the next three years. The report ‘Trends in the Banking and Finance Sector’ identifies three global trends impacting banking and finance CRE executives, namely smart growth, flexibility and a stronger connection to the C-Suite.

“Banking and finance CRE executives are trying to do more with less. For example, adopting workplace strategies that drive productivity or developing sustainability measures to cut energy costs while enhancing the brand image and responding to customer and employee expectations,” said Mr Mackenzie.