Mumbai: Real estate services firm Jones Lang LaSalle expects its India business to lead growth in Asia as demand for office space continues from the still rapidly growing services sector, its chief executive said on Saturday.
India’s economy, Asia’s third-largest, is expected to slow down to 7% in 2008-09, hit by the global economic downturn. The services sector, despite recent hiccups, is however set to grow at nearly 10% in the period.
“In India, demand for services is fairly robust as the IT, BPO and KPO segments grow nicely. Perhaps, demand might grow even more steeply once the confidence comes back to the market,” Colin Dyer, also Jones Lang’s president, told Reuters in an interview.
Chicago-based Jones Lang LaSalle, with 2008 revenue of $2.7 billion, expects India to contribute 6-7% of worldwide revenue in three years, up from 3-4% currently.
The company’s business in Asia-Pacific slowed in 2008, but was still the fastest growing globally, primarily led by growth in the two large markets of India and China.
“The Australian, Singapore, Japan, Hong Kong economies are probably all in recession or close to recession, while China has clearly been impacted by fall in manufacturing goods from Europe and US,” Dyer said.
“In the context of Asia, India is in a very good position.”
Last year, inflated prices and lack of finance led to sales slumping in India after five years of boom. But Dyer expects steady demand for office space from growing businesses and more realistic pricing to help revive transactions soon.
Revival only by next year
The global real estate downturn, sparked by a credit crisis, dragged US property values down 15% last year, while values in a key Europe market like UK fell a quarter.
Jones Lang LaSalle suffered flat revenue growth in 2008, with its US and Europe businesses hit the most. While its investment sales business nearly halved, growth in leasing, corporate outsourcing and tenant representation helped only slightly.
“There is no revival at this point in demand for space nor in the level of activity. What you can say is the rate of reduction has slowed,” Dyer said.
He expects confidence returning globally only by the end of 2009 or the beginning of next year.
“Stock markets in general tell us when we are about to see a recovery. If stock markets are stable for a couple of months, that’s a good sign that people are gaining confidence and will start to reinvest,” Dyer said.
Meanwhile, Jones Lang, which last year closed 15 acquisitions globally, will focus on consolidating its business, “we won’t acquire anything this year, we’ll just wait. But we’re seeing opportunities to hire individuals, teams, and bring new skills.”