CBRE: Asian Financial Firms Moving Ahead of Western Counterparts

Hong Kong Central Business District

Hong Kong Central Business District

In its latest report real estate services firm CBRE says Western institutions face more business challenges and are in cost-saving mode, while Asian institutions remain positive and are expanding their presence across the region.

CBRE points out that globally the financial sector is facing multiple challenges, including tighter regulations, economic uncertainty and fast moving technological changes. The research from CBRE found that within the Asia Pacific region, there is now a distinct contrast between the fortunes of APAC-based institutions and Western financial institutions.

Western institutions in particular face more business challenges and are in cost-saving mode, while conversely, APAC institutions remain positive and are expanding their presence across the region.

APAC Firms Headcount Growth

The contrasting fortunes for Western and Asia Pacific financial institutions in recent years have been reflected in headcount growth.

Western financial institutions reduced 13 percent of their global workforce between 2009 and 2015. Over the same period, Asia Pacific financial institutions grew their workforces by 34 percent, and have continued to add new headcount in 2016.

Solid Demand From Financial Institutions

Office leasing demand from Asia Pacific financial institutions remained solid in the second quarter of 2016 and Asia Pacific financial institutions are displaying a strong appetite for premium grade new office buildings.

«Asian banks are expanding into emerging markets, particularly in Southeast Asia, supported by the liberalization of regulations covering foreign banks. The Philippines saw five regional banks open new offices, including Japanese-based Sumitomo. Meanwhile, Chinese banks have been particularly active in expanding in CBD areas of Hong Kong, Singapore and Sydney,» said Ada Choi, Senior Director of Research, CBRE Asia Pacific.

Western Financial Institutions Cautious

Western financial institutions have traditionally been large space users, particularly in prime office locations. However, in recent years, headcount reduction and numerous business challenges have prompted many firms to continuously review their long-term space requirements against their real estate portfolio. 

International investment banks and commercial banks have been reducing their office footprint in prime areas, a trend that has resulted in a decline in the average size of office leasing transactions in gateway cities such as Beijing, Tokyo, Hong Kong and Singapore. In Singapore, Sydney and Melbourne, western banks have sub-leased their excess space.

«We see that Asia Pacific institutions currently have a stronger preference for buying, while Western financial institutions constantly evaluate lease-versus-buy decisions in markets where they have a relatively large presence. However, most prefer to have asset-light portfolios and thus prefer to lease. In contrast, Asian financial institutions tend to have a stronger preference for owner-occupation,» added Choi.

 

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