- An insight into Corporate Real Estate Management
An insight into Corporate Real Estate Management
It is a projection that the two thirds of humanity will live in
the cities by the end of the next 50 years (BBC, 2006). Along with
the fast growing economies of the developing and emerging nations
like China, India, UAE - the real estate market and the industry
has realised great successes, pulling the economic development
significantly, and contributing a lot to the nation's prosperity.
Today, the real estate construction industry assumes more tasks.
China in 2008 has seen over RMB 3,000 billion entering real estate
construction (Gao, 2009). India, on the other hand, could see $12.1
billion investment in real estate sector (IBEF, 2009). This has
turned the focus on to the cost control and regular management in
the real estate industry. The investments in this industry are very
high and lasting, thereby encouraging a lot of people, institutions
and agencies to take active participation in the construction
projects. This shift has resulted in multiple levels with the cost
control and management becoming more complicated (Gao, 2009). An
inefficient realisation of the objectives of the project could lead
to great wastage and would later bring more pressure on the
property management sector.
Literature by both management theorists and practitioners
perceive that any business will perform successfully if it
understands what its business is and focuses on aligning the
operational decisions and implementing them in accordance to the
objectives (Charles, Grantham & Ware, 2007). Strangely in the
case of real estate industry, this connection is missing, wherein
it is not clear how the businesses address their operating
decisions and implements their strategy decisions though the real
estate decisions (Krumm & Vries, 2003). Nourse and Roulac
(1993) argue that surveys of corporate managers indicate a curious
ignorance and indifference in relating their real estate assets to
the overall strategies guiding their organisations.
Professional skills required for Real Estate Management
Krumm and Vries (2003) argue that the large degree of insecurity
in real estate decision making is also a major reason why corporate
real estate is often overlooked. The role of property managers or
advisors is henceforth very important as their advice is crucial
and could result in large investments. Following are some
characteristics of an ideal property manager (IREM, 2009):
- Updated knowledge about new laws and practices in the given
localities, cities and states.
- Updated on local ordinances.
- Very honest while enforcing property rules and rental
- Well oriented and organized with paper works.
- Good communication and computer skills.
- Should not refrain from working with the public.
- Should have a strong sense of duty and commitment.
Corporate real estate management is predominantly approached
with an economic point of view - mostly concerned with the
financial gains of cost minimisation, often at the expense of other
strategic priorities. This paper however identified a growing
paradigm shift among organisations towards the valuation of their
real estate assets. It emphasises the fact that an organisations
real estate management decisions will be effective depending on the
extent to which it supports the overall business objectives. This
can be achieved only by careful consideration of how the real
estate assets contribute to corporate strategy and in turn how the
real estate operating decisions support the real estate strategy.
This transition in corporate attitude has resulted in changing
relations among the various corporate centres and the operating
companies. In addition it has also reshaped the traditional role
and the positions of staff departments. This realignment should
result in a more strategic orientation and would enable the
organisation to effectively relate productivity to shareholder