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11/13/2018 Gearing up for growth in Asia-Pacific, Companies & Markets - THE BUSINESS TIMES

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TOPLINE

Gearing up for growth in Asia-Pacific


Cushman & Wake eld chief executive (Asia Paci c) Matthew Bouw says group wants to
beef up its service lines.

 MON, NOV 12, 2018 - 5:50 AM

NISHA RAMCHANDANI  nishar@sph.com.sg  @Nisha_BT

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11/13/2018 Gearing up for growth in Asia-Pacific, Companies & Markets - THE BUSINESS TIMES

Asia contributed nearly 20% to the group's topline last year. Mr Bouw says: "We probably have more white
space in Asia, which would drive incremental growth, relative to other regions." PHOTO: CUSHMAN & WAKEFIELD

REAL estate services group Cushman & Wake eld is turning its focus to building its service
lines in its existing markets as well as acquisitions to facilitate its growth across the Asia-
Paci c.

Its strategy is driven by key industry trends shaping the global commercial real estate
industry. Clients - such as multi-national corporations (MNCs) - today are looking for rms
that can provide services in major global markets as they outsource more of their
commercial real estate, chief executive (Asia Paci c), Matthew Bouw, said. This helps to
enhance e ciencies as well as cost-savings.

"If you're selling an asset in Singapore, you want (access to) all the potential buyers in any
city in any country. As the markets globalise, the requirements of investors is becoming
deeper," he said

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11/13/2018 Gearing up for growth in Asia-Pacific, Companies & Markets - THE BUSINESS TIMES

In 2015, Cushman & Wake eld merged with DTZ - which had previously acquired
commercial brokerage Cassidy Turley - in a deal he describes as having "natural synergies"
in terms of building a global platform. "It's given us the global scale and reach and
deepness in all the major markets to service clients."

At the same time, more capital is being invested in commercial real estate thanks to cash-
rich funds. While interest rates are on the rise, he acknowledged, they are still relatively
low compared to historical averages.

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"A lot of the economic indicators are still pointing to quite a robust economy in the US. We
think it will still be relatively strong in 2019. As you get into 2020, that's a bit more di cult
to predict. But certainly on commercial real estate, we remain positive on 2019."

To fuel growth in Asia, the group will be focusing on building its service lines in its existing
markets and providing more services to clients. For instance, it already has a strong
property and facilities management business and project management business,
accounting for nearly 70 per cent of revenue in the region.

It is looking to build its capital markets or transactional business, which covers the sale of
real estate assets, leasing as well as valuations; this could be done by acquisitions or
ramping up hiring where there's "white space". "We probably have more white space in
Asia, which would drive incremental growth, I imagine, relative to other regions."

Asia contributed nearly 20 per cent to the group's topline last year.

Key deals

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Some of the key deals the group brokered this year include the sale of Twenty Anson for
US$377 million. It has also been appointed a broker for the sale of Chi ey Tower, with GIC
selling its 50 per cent stake.

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11/13/2018 Gearing up for growth in Asia-Pacific, Companies & Markets - THE BUSINESS TIMES

He describes Singapore as one of the jewels in Cushman & Wake eld's crown. "We see the
economy as relatively strong here and there continue to be a lot of opportunities
domestically within Singapore," Mr Bouw said.

"It's a hub for innovation and technology with 4,200 MNCs. Most of those corporates are
performing well... and the demand for o ce space is relatively strong."

Vacancy rates in the o ce segment are low by global standards, with supply not hitting the
market till 2022, he noted. But the retail industry is undergoing structural changes - as it is
across the globe - from changing consumer preferences as well as the rising popularity of
e-commerce.

Premium shopping centres, which enjoy a lot of footfall and throngs of tourists, may
continue to do well, but boutique outlets or malls in less frequented locations may
struggle, he reckons. To combat this, malls are introducing activity-based retail, such as
arcades and cooking classes.

The private residential property market here, on the other hand, has been hit by a fresh
wave of property cooling measures in July, which brought higher additional buyer's stamp
duty as well as tighter loan-to-value limits for property.

This was followed by the Urban Redevelopment Authority's (URA) recent announcement
that it would up the minimum average unit size of new private residential developments
outside the central area from 70 square metres to 85 sq m from Jan 17 next year. Nine
districts - including Marine Parade and Stevens-Chancery - would have even more stringent
requirements of 100 sq m.

Nonetheless, according to Cushman & Wake eld research, price growth of the private
residential market is still expected to remain positive, albeit at a much slower upward
trajectory with prices to grow by 0 and 3 per cent next year. New home sales are projected
to maintain the momentum of around 9,000 to 10,000 a year.

Deploying capital

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Meanwhile, in the region, "when we're looking at deploying capital ourselves, we'll look at
continuing to grow facilities management, property management, project management,
but equally look at opportunities in the transactional space," said Mr Bouw, adding that the
latter is a smaller business here which means more opportunity for growth.

This could involve recruiting more brokers for speci c markets as well as through
acquisitions.

"There's a plethora of mid- to small boutique rms. A lot of these rms are nding it
harder to retail their talent, harder to service clients and as a result, they're looking for a
home."

The ideal t would be a mutually bene cial relationship where the rm plugs the gaps in
Cushman & Wake eld's portfolio. "I think what we're going to see is a proliferation of
consolidation. The global rms are going to grow more rapidly than the Tier 2 rms."

In the third quarter of this year, Cushman & Wake eld acquired capital markets rm Inc RE
and Knight Frank's Sydney Valuations business, both of which are in Australia. The group
will continue to scour for opportunities across the region, zooming in on key gateway cities
and markets such as Singapore, Tokyo, Sydney and China.

The group's recent listing on the New York Stock Exchange in August has strengthened its
balance sheet and will give it more access to cash, he added.

It has also made the group more attractive when it comes to mergers & acquisitions and
acquiring talent.

In Singapore, property veteran Dennis Yeo - who previously worked at CBRE and Colliers
International - recently came on board as chief executive (Singapore and South-east Asia).

Tech gains

The group is also using technology and innovation to enhance its operations and to
provide services more cost-e ciently for clients. Following the merger with DTZ, it has
worked to simplify its various systems into a common integrated network, which is

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adaptable for clients to use as well. For example, its clients generally reap 10-20 per cent in
cost e ciencies resulting from using the group's facilities management technology stack.

"We've focused heavily on how we can drive e ciencies into the services we deliver on
behalf of our clients. That's to drive down our core costs and to provide better service
more safely," said Mr Bouw.

For instance, it uses sensors to ascertain the volume of passenger tra c in a building and
then adjusts the air-conditioning accordingly. It also makes use of drones to investigate
whether hard-to-reach spaces (such as the tops of buildings) require maintenance, while
robotic cleaning devices help to save labour costs. Remote monitoring of buildings or
facilities can also be safer and more economical than with security guards.

Aside from changing the way the group operates, technology will also disrupt commercial
real estate in other ways over the next ve to ten years as autonomous cars and ride-
sharing grow more common, he reckons.

For instance, petrol stations would probably have to be repurposed to facilitate electric
cars. The valuations businesses could also be disrupted by arti cial intelligence.

With this in mind, the group has started to partner and invest in property tech start-ups,
including MetaProp in New York and Chicago-based incubation hub, 1871.

CUSHMAN & WAKEFIELD MATTHEW BOUW TOPLINE

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