Mumbai: Property services firm Jones Lang LaSalle sees its Asian business driving growth next year as the region powers a global economic recovery, a top official said on Monday.
The company expects Asia to contribute almost a third of revenue in 2010, from a quarter in 2008, on the back of rising demand in China and India and as key markets such as Hong Kong and Australia start to show recovery.
China and India — the world’s two most populous countries — have seen home and office sales reviving in major cities as prices fell as much as a fifth and lower mortgage rates, after the global financial crisis last year cut off funding and demand.
“It seems Asia is recovering more quickly than the US or Europe and actually will be one of the drivers of the world recovering,” Jones Lang’s chief financial officer, Lauralee Martin, told Reuters in an interview.
“It’s growing on both revenue and profit basis. It could reach a third of our revenues as we get into next year,” Martin, who is on a short visit to Mumbai, said.
Jones Lang is betting on more transactions as other Asian countries also see capital coming into the market, and believes its strong position in the property management business gives it the competitive edge.
“In the first nine months, we have grown our property management business by 30% because we have been able to save clients a great deal of money from that service,” Martin said.
“In a slowdown, reducing employees may not be the best thing, but reducing the cost of services is certainly a better option,” she said.
Last month, the Chicago-based company, one of the world’s largest real estate services firms, reported third quarter income rose a third, but said revenue fell 12% to $595 million as the global real estate downturn weighed.
“The US market is not expected to get better until mid-2011. We could see a bottoming out by late 2010. But leasing and project development business will still feel pressure,” Martin said.
In Asia, positive sentiment in the housing market has led to developers flocking back to the equity markets after a two-year hiatus, and she said talk of an asset bubble was premature.
About 30 real estate firms have lined up for listings in China and India following a stocks rally. Chinese developers include Evergrande and Fantasia, while Indian firms include Emaar MGF, Lodha Developers and Godrej Properties.
“For the industry this is a good thing, because it is equity going into real estate in a marketplace that needs to have some deleveraging and less debt,” Martin said.
India’s benchmark stock index is up 70% so far this year, while the MSCI Asia Pacific exJapan stocks index has risen nearly 60% in the same period.
“In the US and Europe, there’s nothing being built. There is property being built in Asia but it’s also a market that has business growth that is going to need that property,” Martin said.