Managing Corporate Real Estate
It is globally acknowledged that the effective management of corporate real estate is crucial to the realisation of a company’s business goals. Corporate Dossier investigates how the practice is making inroads into India as well.
Creating a senior management position to solely manage corporate real estate might seem a revolutionary idea by Indian standards. However, the International Development Research Council (IDRC), the world’s leading professional association for managers of corporate assets considers corporate real estate management absolutely essential.
‘IDRC is focused on elevating corporate real estate from the transactional to the strategic realms of management,’ says Melanie Hill, IDRC’s regional director for Asia.
A corporate real estate executive holds a key position. He has strategise and for this he not only needs to interact closely with the human resources, information technology and finance departments, but also the top honchos in the organisation. He has to at all times be aware of the short-term as well as long-term business plans of the company.
‘Globally companies need to understand that managing corporate real estate is a long-term strategic exercise which has to be in tune with the company’s business plans – it’s certainly not about putting out fires,’ says Ed Rondeau, Director, Global Operations, IDRC.
Corporate real estate management is a scientific process involving information gathering, identifying risks to an analysis of market, competition, technology and environment, together with the evaluation of alternatives and development of future scenarios. When a piece of real estate is purchased, some question are thrown up: how far and how quickly will the business expand, what the human resource requirements will be, how many workstations will be needed, and so on. Diversification plans need to be taken into account too, as different operations require different kinds of space.
For IDRC, with 41 local chapters (seven in Asia), India offers immense potential. ‘Government rules on real estate are gradually relaxed, privatisation is on the rise, and foreign investment is being welcomes,’ says Rondeau.
When IRC’s Indian Chapter was opened in Mumbai last week, the response was considered good, with an enrolment of members from companies like Siemens, IBM and K Rahejas. Within a few months Rondeau hopes to achieve a critical mass of ten members.
In India, a real estate boom is on because of the heavy demand from the burgeoning retail and IT sectors, and the government opening up key sectors to foreign investment.
‘Professional real estate management was till recently non-existent in India but now we see attitudes maturing,’ says A V Goel, MD, Brooke International India, a real estate consultancy firm. ‘We have to realise that Real Estate, HR, IT and finance are global infrastructure partners,’ adds Rajeev Kapoor, a program manager for IBM, an IDRC member.
However, this linkage is not that old in developed countries either. It was only recently that one of IDRC’s management initiatives grabbed headlines in the New York Times. The newspaper reported that the corporate members who were practicing this initiative were models of corporate real estate executives and were ‘…leaders playing strategic roles within their corporations.’
The new reality is that real estate management is not about simple buying, leasing and selling, but about collaboration and gauging employee satisfaction, consulting with the finance as well as IT departments. ‘We have a long way to go even in developed markets,’ admits Rondeau.
Members of IDRC get full access to IDRC resources, including research, education and leadership programs. Networking is also considered important. The IDRC World Congress, held twice annually in the UD, Europe and Asia, is one of the industry’s largest and most comprehensive networking forums.
IDRC’s goal is developing markets like India is simple. Get companies to practice professional real estate management. ‘We hope to make IDRC members workplace innovation strategists and leader within their corporations,’ says Hill.
(Published in The Economic Times, year 2000)
Note: Although this article was published some years ago, the Indian scenario has not changed. The real estate boom is accelerating, but real estate management has not become professional. One of the reasons for this is that Indian companies do not want professionals to execute these kinds of jobs as the real estate business in India is fraught with black money.
More articles on India’s Real Estate.