The internationalisation of US and UK real estate service providers: competing for a global badge of quality?
Éamonn D'Arcy†, Geoffrey Keogh‡ and Stephen Roulac* †
Centre for Spatial and Real Estate Economics, Department of Economics, Faculty of Urban and Regional Studies, The University of Reading, PO Box 219, Reading RG6 6AW, England e-mail
[email protected] ‡
Centre for Property Research, Department of Land Economy, University of Aberdeen, St Mary's, King's College, Aberdeen AB24 3UF, Scotland e-mail
[email protected] ±
The Roulac Group, 709 Fifth Avenue, San Rafael, California, U.S.A e-mail
[email protected]
(Draft. Please do not quote without the authors’ permission)
Abstract This paper examines the strategic implications for the future of real estate services (RES) in the UK and the US as a result of both a long-standing process of internationalisation in this sector and the more recent emergence of the first ‘global’ RES firms. Through a comparative analysis of the respective paths to internationalisation taken by RES in the UK and the US issues relating to the implications for the future structure, practices and professional ethos of RES are examined in terms of particular motivations for, and organisational approaches to, internationalisation. In addition, consideration is given to the importance of ‘Britishness’ versus ‘Americanness’ as internationally recognised signals of service quality, and the possibility that one particular professional standard may come to dominate over time. Keywords: real estate services; internationalisation; UK; US
The internationalisation of US and UK real estate service providers: competing for a global badge of quality?
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Introduction
Recent contributions (D’Arcy and Keogh 1997, Lapier 1998, Roulac 1998, D’Arcy et. al. 1999) have examined the internationalisation of real estate service (RES) provision as an aspect of institutional change in the real estate market. Keogh and D’Arcy explain the internationalisation of RES firms in terms of the theory of multinational enterprise as applied to professional business services. They argue that, given the success and importance of UK firms in this process, ‘Britishness’ may have come to represent a global ‘badge of quality’ in RES provision and the determination of professional standards. Out of this work come two key issues which deserve further exploration. First, what are the implications of particular organisational approaches to internationalisation for the structure and practices of RES firms in the future? Second, how will the relationship between RES firms and their professional bodies evolve as they both pursue internationalisation, albeit with different objectives in mind? This paper examines these questions in relation to the internationalisation of RES providers originating in the US and the UK. The most recent stages of internationalisation have increasingly brought US and UK firms into contact through various forms of partnership or strategic alliance, designed to ensure global representation. This inevitably introduces a mix of professional cultures and management practices which have to be resolved if the relationship is to work. In this research we explore differences in professional formation, management structure, range of services provided, interaction with other professional business services, and other factors which influence the nature and form of internationalisation in the RES sector. In particular, we consider whether the concept of ‘Britishness’ versus ‘Americanness’ has any meaning as an internationally recognised signal of service quality, and the possibility that one particular professional standard may come to dominate over time. We also look at the responses of US and UK firms to competitive threats from other professions and, in particular, the encroachment of accounting firms and management consultancies into RES provision. Sections 2 and 3 of the paper deal respectively with the internationalisation of UK and US based RES providers, highlighting and explaining different patterns of
internationalisation. Section 4 draws together the UK and US experience of internationalisation in a discussion of RES provision in a global market, and section 5 offers conclusions regarding the implications of internationalisation.
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The internationalisation of UK real estate service provision
This section examines the internationalisation of real estate service provision in the UK. Its main focus is the RES firms originating in the UK which now operate at the international level. However, it also embraces those other business service firms which provide RESs as a secondary activity, and the professional bodies which underwrite standards of practice and are also engaged in a process of internationalisation. The internationalisation of UK based RES providers really began in the 1950s and 1960s with the small scale expansion of two firms (Jones Lang Wootton, Richard Ellis). However it is only over the last 20 years that substantial internationalisation has occured, with a massive acceleration of the process since the mid-1980s (D’Arcy and Keogh 1997). This reflects a number of significant influences, including the completion of the European Single Market, the opening up of the former communist regimes of Central and Eastern Europe, the deregulation of financial markets, the revolution in IT and telecommunications, the general increase in global economic activity and especially the internationalisation of professional business services (PBS). Accordingly, the last 15 years or so have seen internationalisation develop beyond the Commonwealth countries, to include particularly the EU countries, the emerging European economies, and North America. In the most recent years, attention has also been turning to South America, the Indian subcontinent and the non-Commonwealth countries of South East Asia. There is a growing perception among the leading RES providers that they must secure a truly global representation, although the potential of some target markets is as yet unproven and extremely risky. In the UK, the RES sector is fairly disparate in terms of firm size, geographical coverage, services offered and sectoral specialisms. However, the sector has a strong and unifying identity which reflects the status of the main professional body, The Royal Institution of Chartered Surveyors (RICS) and the resulting high level of ‘professionalisation’. The RICS has an established strategy for internationalisation which has included the establishment of an office in Brussels, the creation of the European Society of Chartered Surveyors, and the validation of exempting degree programmes in a number of universities outside the UK. In most other countries, there
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is no direct equivalent of the British general practice chartered surveyor (although the RICS has been particularly influential in the Commonwealth countries). Real estate markets elsewhere are either strongly professionalised but subject to different styles of professional formation, or unprofessionalised and reliant on a diversity of RES practitioners. The internationalisation of UK RES provision has been dominated by the large, generalist or ‘vertically integrated’ RES firms which offer a diverse range of services and have comprehensive UK representation. The move towards an international presence has either built upon an extensive UK network of offices or has been developed at the same time as a UK network. Firms have tended to build outwards internationally from a main base in London, but also perceive the need for a physical presence in the main provincial centres of the UK (Leyshon et al 1990). By 1997 fourteen of the leading 100 surveying practices in the UK had established international offices and collectively generated 57 per cent of their revenue overseas (Estates Gazette 1998a). These firms generally involve equity ownership of the UK network and operate under a unified brand name. Following the OLI model, the ownership advantages underpinning the internationalisation of these firms include the long professional tradition in RES provision (associating the firms strongly with the main professional body) and a strong brand image through which they can signal service quality. They have acquired internationally tradable expertise in property investment, management and valuation based on the formative influence of the UK as a mature real estate market (Keogh and D’Arcy 1994), and have enhanced their skill base to provide a widening range of services (although some commentators argue they remain over-reliant on chartered surveyors). They also possess an established client base and an accumulated stock of information relating both to real estate in general and the specific interests of their clients (although recent research suggests that even the large RES practices may be bad at sharing information: Adair et al 1998). Turning to locational factors, RES firms offer services which are geographically tradable but which are also locationally specific due to their dependence on strong local knowledge and involvement. Internationalisation allows the creation of a widespread geographical presence which, once in place, supports further business expansion. Initially the locational advantage lay with the Commonwealth countries where the legal and institutional environment was accessible and comprehensible to UK firms, and where formal professional status was accorded to RESs. Here the
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export of low value and routine RESs provided a stepping stone for subsequent high value RESs. The relatively late focus on Europe suggests a perceived initial disadvantage in terms of language, institutions and business culture, overtaken now by the apparent advantages of proximity, trading links, and the opportunity to professionalise RES provision in markets where professional formation and control is weak or non-existent. Finally, considering internalisation factors, these firms have traditionally been organised as partnerships, providing a high exposure to risk but offering the benefits of strong management control. However, the growth of leading firms, the expanding range of business services offered by them, the needs to extend their capital base, and the pressure to internationalise have all led rapidly towards incorporation. (less than 50 per cent of the top 100 UK firms are still true partnerships (Estates Gazette 1998a)) This has led to a restructuring of management and control, which has either implicitly or explicitly supported internationalisation. These firms are still criticised for being too traditional (‘old school tie’) and insufficiently meritocratic, but this is changing fast as indicated by the recruitment of non-cognate and fast-track trainees, and the integration of research and financial functions alongside traditional surveying activities (Lapier, 1998, D’Arcy et. al, 1999). Some firms amongst this leading group have internationalised though network alliance and affiliation, where costs are low but managerial control over service standards and use of the global brand is weak. However, most of these firms have internationalised through direct corporate expansion, providing stronger managerial control but at a high financial cost. Some appear to have reached the limit of internationalisation by this route and have entered large scale strategic alliances, particularly to obtain a meaningful profile in North America. Of less importance among internationalising RES providers are generalist RES firms with local or regional UK coverage. These firms may offer all RESs or just a subset. They are likely to specialise in the lower value RES functions, although some might be significant players in their regional markets. This group benefits from the same ownership advantages as the national firms in terms of professional tradition, but brand image is likely to be less well developed, and they will have less access to, and control of, data. There will be limited economies of scale and scope at this level so that, although they may develop an effective niche in the domestic market, this is relatively unlikely to form a platform for internationalisation. Similarly, the locational factors influencing internationalisation will be weaker. These firms are less likely to have, or perceive advantage from, overseas offices so that, where internationalisation occurs, it
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is likely to be opportunistic rather than strategic. As a result, their international representation often appears idiosyncratic and explicable only in terms of factors like their specific ownership history and client base. Internalisation characteristics are similar to the national firms, but the ownership structure is predominantly based on partnership and management control reflects the organisational needs of a relatively small scale operation. It may be easier to create a corporate ethos but these firms typically have less to offer staff in terms of resources and mix of experience, and may therefore be vulnerable to the loss of skilled personnel at all levels. This constitutes a relatively weak base for internationalisation and, where these firms have extended their influence outside the UK, this has normally been through a network alliance. For firms in this category it is particularly important to ask whether these are ‘real’ networks with genuine substance, or simply a marketing ploy. The tendency for increasing polarisation between the viable international operators and the rest suggests that the further internationalisation of local or regional UK RES firms is unlikely. A third category of internationalising RES provider operating out of the UK is the integrated management consultancy (eg PricewaterhouseCoopers, KPMG and Arthur Andersen). To date these firms have been relatively minor contributors to the domestic provision of RESs and, as a result, have not represented a significant conduit for the export of UK RESs. However, their domestic role is increasing as these business build RES teams to challenge the traditional RES sector, and this seems certain to lead to greater international involvement. In ownership terms, these firms enjoy reputation as broad PBS providers, brand image (defined both by corporate identity and by their ‘Americanness’, the latter being a form of ‘space branding’ (Roulac 1997b) and a point to which we return in a later section), economies of scale and scope. While their reputation hinges on ‘professionalism’ and the ability to draw on appropriately qualified professional staff, they are not exclusively associated with any single professional body. This allows firms to construct multi-disciplinary teams around specific business problems, rather than compartmentalising their PBS activities. They are also able to draw on extensive information bases covering business data, specific localities and specific clients. The inclusion of RE advice within their portfolio of business services represents one aspect of their economies of scope, allowing firms to serve clients with an integrated array of strategic management information. Their locational advantage in the provision of RESs arises out of an existing worldwide network of offices and consultants giving expertise in ‘local business
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culture’. It is relatively easy to graft on an international RES element to complement their established product mix. Interestingly, while the traditional RES firms discussed above appear to have been drawn first to the more ‘comprehensible’ foreign markets, the management consultancies have built a specialism in understanding the unfamiliar and resolving ‘non-standard’ business problems, and they now have a comparative advantage in this area. The key internalisation characteristics include their ownership mode as publicly quoted companies traded on various stock markets around the world, giving access to international capital for expansion and co-investment with clients. Their single brand identity aids, or is aided by, integrated management systems, inculcating a ‘corporate culture’ within which high quality professional staff can be recruited and retained from a diverse range of disciplines.
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The internationalisation of US real estate service provision
Following from the discussion of internationalisation by UK based RES providers, this section assesses internationalisation of RESs from a US base. As before, it considers the key actors involved in the process of internationalisation, including the professional bodies, and attempts to explain the phenomenon within an OLI framework. It is clear that the internationalisation of RES practice has a much shorter history in the US. Most activity has taken place very recently, driven by the same global influences as the UK RES providers. However, it appears that the RES sector in the US has exported its services through different channels and with different objectives. In comparison with the UK, the RES sector in the US is organisationally and functionally even more disparate. This may reflect both the larger size of the US market and a different tradition and experience of professionalisation. As a consequence, the US sector has a greater diversity of firm types that have internationalised in different ways and at different paces. In looking for internationalisation activity arising from the US, five categories of RES provider: integrated management consultancies, vertically integrated RES firms, networks of independent RES firms, diversifying RE and financial firms, and niche real estate consultancies. Unlike the UK, the RES sector does not have such a coherent professional identity. It is a ‘professionalised’ market, but professional formation takes a different form and real estate practitioners are represented by a variety of professional institutions. The Appraisal Institute and the Society of Real Estate Appraisers enforce their respective codes of professional ethics and standards of professional appraisal practice, and other quasi-professional associations also influence
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the RES market. However, none of these professional bodies has dominated the RES sector in the way that RICS has in the UK, and there is little or no evidence that they have an international strategy in their own right. The main route through which RES provision has been exported from the US has been the integrated management consultancies. These firms have traditionally internationalised on the basis of their core activities, in particular accountancy, IT and PBS provision. On the basis of this established process of internationalisation, they have created a powerful brand image in which their ‘Americanness’ forms part of a perceived global badge of quality. As explained in section 2, the development of RES provision represents a logical extension of their core business activities for these firms. In the case of the US, the diverse structure of the RES industry, and particular its professional diversity, favoured the movement of the management consultancies into this market sector at a relatively early stage. Once established, a RES capability represented another tradable ownership advantage of the firm, which it could exploit through its pre-existing international reputation as an established high quality PBS provider. By integrating RESs with other aspects of management consultancy, the range of RESs provided by these firms has tended to be at the ‘high value’ end of the spectrum. However, lower value services have been provided where client demand exists, for example in markets such as those in Southern, Central and Eastern Europe where RESs are not well developed. The locational and internalisation advantages attaching to these firms have already been outlined for the British case. However, the international reach of these firms from their US base, in the field of RES provision, is far greater than it is from the UK. Their export of a ‘US-style’ of RES provision is becoming a very significant source of competition to established RES providers in many markets worldwide.
The second significant vehicle for the internationalisation of US based RESs is the generalist, vertically integrated, RE firms which provide a full range of RESs, including consultancy, property management, appraisal and brokerage functions. Firms of this kind, operating at a national level as a single corporate entity, are limited in number. The most prominent include CB Commercial (now renamed CB Richard Ellis), Grubb & Ellis, and Cushman & Wakefield which, given their size and market penetration, are closest to being recognisable nationwide brand names in RESs. These are comparable to the generalist firms which dominate RES provision in the UK. Like their British counterparts, they bring with them key strategic assets such as comprehensive market coverage, a consistent standard of RES provision, and a strong national brand identity.
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In locational terms, these firms have a substantial domestic market to service, and lack the international advantages and focus of their UK equivalents. The focus of their expansion strategies over the last twenty years has been largely domestic, reflecting their need to become national firms in the US context. Possibly for this reason, the US firms in this category have been relatively late to internationalise. Where internationalisation has occurred, it has largely been through network alliances (eg Cushman & Wakefield’s joint initiative with Healey and Baker, and CB Commercial’s global alliance with DTZ and CY Lueng) and has arguably been a passive response to the international ambitions of UK and other firms seeking entry to the US market. Since mid-1997 there has been an increase in both the pace and form of internationalisation by these firms, with a significant switch in strategy towards equity expansion. CB Commercial has acquired outright, Koll in South East Asia, Richard Ellis International and Hiller Parker in the UK market. Cushman & Wakefield’s and Healey and Baker are in the process of merging. Grubb & Ellis which has not yet internationalised apart from a representative office in London, and cites expansion into Europe as one the principal reasons for moving its headquarters from San Francisco to Northbrook, Illinois is currently in the process of acquiring A UK based international service provider. The third category of actor in the internationalisation of US RESs is the independent local or regional RES provider that has secured nationwide presence through membership of a strategic network alliance with other similar firms (examples include CORFAC, The Commercial Network and ONCOR). In general, these alliances are relatively loose affiliations or, in some cases, referral arrangements. They can bring together a considerable variety of RES firms, some of which provide a full range of services comparable to the unified national firms, while others specialise solely in appraisal and brokerage services. The network offers ownership advantages which the independent firms lack: group identity, diverse expertise, shared information systems and client lists. From an internalisation perspective, they lack the strong management structure or the revenue raising advantages of the large integrated firms, but they do provide experience of network management that can be applied in an international context. The evidence shows that these firms have exhibited a clear strategy of internationalisation in recent years, using the existing domestic network as a vehicle for gaining representation outside the US. This has taken place through both the inclusion of single independent firms (like Hillier Parker and King Sturge from the UK) and preexisting network alliances (like ICPA). Again it can be argued that the impetus for this form of internationalisation came from non-US firms looking for representation in the
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North American market rather than the other way about. The locational advantage enjoyed by the network groupings lies partly in the fact that many smaller non-US RES providers who could not afford direct international expansion have recently been anxious to demonstrate their international credibility, particularly through links with the US. This may explain one intriguing aspect of this process, namely that the US network brand names have generally been retained to represent the resulting international alliance. An emerging force behind the internationalisation of US RES provision is firms with existing strengths in a complementary service area, such as residential real estate, facilities management or financial services, who are actively diversifying into commercial RESs. These firms do not carry the usual ownership advantages of professional identity or recognised brand name. However, they may have skills and experience that allow them to meet non-traditional demands for RESs. In locational terms it is difficult to see what advantages might underpin a strategy of internationalisation within an RES sector to which these firms are new entrants. Consequently, it appears that the approach is primarily opportunistic, backed by the internalisation benefits of high market capitalisation and entrepreneurial flexibility. The Insignia Financial Group provides a good example of such a firm. From an established base in the management of securitised residential real estate, it has acquired RES firms throughout the US and more recently embarked on an active strategy of internationalisation through its acquisition of Richard Ellis and St Quintin in the UK. Finally, there is a number of niche real estate consultancies, which in most cases have not yet internationalised but which have the potential to do so within their areas of specialism. Firms included in this category are those such as F.W Dodge, Landauer Real Estate Conselors (acquired by Grubb & Ellis in 1999), La Salle Partners, The Roulac Group and The Yarmouth Group. In general, these firms provide a range of ‘high value’ RESs especially in the context of the real estate investment market. They have significant intangible assets in terms of reputation, established client base, and specialised skills, built up within the US domestic market. Landauer (though its link with Fuller Peiser in the UK), Yarmouth (through the establishment of offices in London, Paris and Frankfurt) and La Salle (through its acquisition of CIN and subsequent merger with Jones Lang Wootton), have demonstrated that these niche services are internationally tradable, although few have sought to exploit their ownership advantages on an international basis. The niche base of the services provided by some of these firms also make then attractive to expanding or internationalising US firms( for example the acquisition of Landauer by Grubb & Ellis).
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Where it occurs, internationalisation in this group is likely to be opportunistic rather than strategically based, for example to service the overseas operations of an existing key client. The small size of many of these firms may inhibit the development of serious internationalisation strategies. In addition to this group many leading financial services and banking groups have diversified into the provision of niche real estate services again especially in the context of real estate investment markets. Examples include Morgan Stanley and Goldman Sachs. Their internationalism again reflects opportunism but also the wider globalisation strategies of their core business in financial services. Like the generalist profession business service firms this group offers similar advantages for clients and are therefore also likely to become more important players in the future of global RES provision.
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Real estate service provision in a global market
The previous sections have documented the internationalisation of RES provision from both a UK and a US base. They have attempted to explain the impetus for internationalisation and the institutional context within which internationalisation has occurred. Most of the significant players in the global RES market originated in either the UK or the US and therefore fall within the remit of this discussion. This section considers the interplay of UK and US RES cultures as more firms achieve, or aspire to, comprehensive international representation.
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Table 1: Strategic features of Internationalisation, UK and US firms UK Service Providers
US Service Providers
Time Period
Focus of Expansion Entry Strategy Mode
Focus of Expansion Entry Strategy Mode
1950-59
National Commonwealth: Australia
Direct
Regional
Direct
1960-69
National Near Europe Commonwealth: Australia/New Zealand
Direct
Regional
Direct
1970-79
National Near Europe Commonwealth: South East Asia
Direct
Regional Canada
Direct
1980-89
Southern Europe Non-Commonwealth Asia US
Direct/ Strategic Alliances
Regional/National Canada
Direct/ Strategic Alliances
1990-97
Eastern Europe US South America Africa/India
Strategic Alliances /Merger
Regional/National Canada South America Europe Asia - Pacific
Strategic Alliances /Merger
1997-99
Emergence of first ‘Global’ firms containing a mix of UK and US professional cultures
It is apparent that the internationalisation of UK and US RESs has been led by different types of RES provider utilising a variety of modes and has differed in terms of timing (Table 1). The UK RES providers have led the process of internationalisation, with the initiative coming from the leading generalist surveying practices, and a professional body which has had a strong influence on practice in the UK and the Commonwealth countries. The long history of professionalisation of RESs in the UK, and the strong brand image attaching to both the leading firms and the RICS, has
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contributed to ‘Britishness’ as a global badge of quality in the field of RESs (see Bland et al 1992). Both the firms and the professional body have traded on this as they have pursued a strategy of internationalisation divided by economic opportunity. However, as economic and social change has opened up opportunities for further expansion, it has not always been easy to market the ‘UK-style’ of RES provision. Within the EU, for example, the legal structure and business culture of the RE market differs markedly from the UK in most countries, and is very under developed in others (see D’Arcy et al 1999). In the new markets of Central and Eastern Europe, an institutional framework has had to be created from first principles. In the established markets of North America, professionalisation is highly advanced, but along different lines. While the RICS has striven for influence across Europe, and elsewhere, (promoting professional courses, advising on professional standards, and establishing groups of chartered surveyors practising in each country), markets which are culturally different are inevitably less open to the RICS model. The recent changes which have taken place in the UK market as a result of internationalisation and increased competition from other service providers are likely to make the RICS model less applicable even in the UK. The generalist firms, who are the ultimate providers of RESs, have had to tailor their offerings and their mode of practice to the specific countries in which they operate. Irrespective of whether internationalisation has occurred through corporate expansion or network alliance, overseas branches or affiliates have become more diverse in terms of professional experience, methods of business, and mix of service activities. This has reinforced changes occurring within the domestic (UK) RES sector, driven by competition from other professions and demands for new types of RES product (eg strategic investment and management advice). For all these reasons, UK RES firms are becoming less strongly linked to a single professional body and their badge of quality is increasingly dependent on the reputation of the firm. US based RES provision had not internationalised until very recently. Neither the RES firms nor the RES core professions had exhibited an agenda for internationalisation. As a result, while the US market is highly professionalised domestically, US style RES provision had not established itself as an international practice standard. However, the leading management consultancies operating out of the US have established themselves as global PBS providers and it has been argued that part of their global badge of quality lies in their ‘Americanness’. By adding RESs to the existing array of PBSs, the management consultancies have become a bridgehead for the international provision of
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US RESs. For example, despite the expansion of UK RES firms across Europe, the management consultancies were quicker to establish a presence in the former iron curtain countries, where they rapidly become involved in RES provision alongside their other activities. Of course it is difficult to attribute ‘national identity’ to the megalithic management consultancies since they have a significant presence in many different counties. In terms of a UK-US companion, it is unclear whether these firms should be seen as a vehicle for importing US business practice into the UK (and elsewhere) or for exporting UK practice (which is why they were discussed in both sections 2 and 3). The answer is probably both, since they have the resources to put together whatever is the appropriate mix of professional skills required to serve a particular client or a particular target market. In the US, established RES firms and networks, and service firms diversifying into RES provision, have only now started actively to pursue international presence. Initially this appeared to be a response to non-US firms seeking to further their global representation through a presence in North America. The active internationalisers amongst the UK firms were reaching a point where expansion into the US was becoming essential but could only be achieved through some form of link with a US firm. Recent developments mark a significant watershed in the process of RES internationalisation. The mode of internationalisation adopted by the major US RES providers, in particular CB Commercial, Cushman & Wakefield, Insignia and La Salle Partners, has triggered a new phase in this process, one which for the first time will create truly global RES firms incorporating a mix of professional cultures (Table 2). In this phase, the traditional merits of ‘Britishness’ within the RES sector are being undermined by the new managerial and professional flexibility offered by the US players. This particularly applies to the diversifying groups which enter the international RES market from a base in trading and financial services. It seems plausible to argue that, while the UK RES industry has opened up many of the international markets in which they now operate, it is the US RES sector which will ultimately benefit through its ability to provide a more diverse array of service products. US firms have belatedly come to see the UK, and the countries served by UK RES firms, as under provided in terms of the integrated property management services which constitute US-style RES activity (Estates Gazette 1998b). Table 2: The Creation of Global Real Estate Service Firms 1997-99
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RES Provider
Core Components
Timing
Size (EMP)
Range of Services
Coverage
CB Richard Ellis
CB Commercial (US) Koll Real Estate Services (SEA) Richard Ellis International Hillier Parker (UK)
1997-98
10,000
Full
Global 250 Offices in 35 Countries
Cushman & Wakefield Healey and Baker
Cushman & Wakefield Worldwide Healey & Baker Partners
1998-99
7,700
Full
Global 129 Offices in 39 Countries
Jones Lang LaSalle
Jones Lang Wootton LaSalle Partners (US)
1998-99
6,200
Full
Global Offices in 34 Countries
DTZ Debenham Tie Leung Global1
DTZ Holdings plc CY Leung & Co (SEA) Edmund Tie & Co (SEA)
1999
3,000
Full
Europe, South East Asia 110 Offices in 30 Countries
Insignia Financial Group
Insignia/ESG Inc. Richard Ellis St. Quintin Reality One Insignia Residential Group Douglas Elliman
1998-99
800 Full with US, UK (UK) Residential US N/A bias in the US
FPD Savills
First Pacific Davies Savills Plc
1997
1,500
5
Full
UK, Europe, Asia-Pacific 86 Offices in 24 Countries
Conclusions
1
DTZ also operates two global joint ventures, (i) Curzon Global Partners formed with US based AEW Capital Management in June 1999 and (ii) DTZ Staubach Tie Leung formed with The Staubach Company from January 2000.
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The processes of change and adjustment already underway in global RES markets suggest that, in future, the integrated management consultancies will play a substantial role in RES provision. They are expanding their RES offer in key domestic markets (i.e. the US and UK) and are well placed to service an international client base which will increasingly demand business advice which cuts across the traditionally separate professional boundaries of finance, accountancy, IT, and real estate. The leading generalist RES firms will also operate at an international level but will draw together, through merger and requisition, businesses which have grown out of both the US and UK. It seems probable that a ‘US-style’ of management and professionalisation will prevail, with ‘Britishness’ diminishing as an internationally recognised badge of quality. These firms will specialise in RESs, but that ‘specialism’ will become much broader to include many activities that have not previously been regarded as the domain of RE professionals. These changes in RES provision are a response to the institutional context within which RESs are demanded, for example the need to translate across diverse business cultures, requirements for more active management of property holdings, etc. However, they will affect in turn the institutional structure of the RES market, in terms of the efficiency of real estate markets, the range of professional skills available, the integration of RES provision with other PBSs, etc. It is possible to envisage an outcome in which international RES provision is able to provide customised services tailored to the needs of specific local or national markets, but at the same time leads to the standardisation of many aspects of RES practice. The changing structure and function of the global RES market clearly has implications for professional bodies and the educational requirements of RES practitioners. ‘Professionalism’ already appears to be supplementing ‘professionalisation’. Professional bodies, like the RICS and the Appraisal Institute, are likely to become less important as a signal of quality associated with RES providers, although they will continue to play a role in the education and accreditation of specialists. The maintenance and validation of professional standards remains important, but it will become less important whether an RES practitioner is US and UK qualified, or holds qualifications in finance or business as opposed to RE.
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