Companies in expansion mode despite global slowdown

Twenty-eight per cent of the companies surveyed said they were turning their focus on the region in response to the global economic slowdown. In fact, they are planning to accelerate their pace of local expansion.

China remains the first preference for most companies planning to expand regional operations, followed by India and Vietnam.

The report highlights changes taking place in the region's economies, which will have a long-term effect on demand in local property markets. For instance, in India, China and Vietnam, rising middle-class incomes are driving demand for more banking-retail outlets.

Thailand has lost some of its competitive edge over the past few years, due to high labour costs and political unrest, said Jones Lang LaSalle (Thailand) managing director Suphin Mechuchep. But improved infrastructure and facilities, availability of skilled labour and growing demand in the service sector have enabled the Kingdom to attract and retain multinational companies.

The survey shows how businesses in Asia remain less affected by the sub-prime crisis, said John Forrest, CEO for regional business lines and corporate solutions.

"As the leading suppliers of real-estate services to companies in the Asia-Pacific, we are seeing strong demand for space. However, an uncertain economic environment is forcing corporations to find smarter ways to manage growth. For example, many are outsourcing management of real-estate or redesigning office space," he said.

The company surveyed three sectors: financial services; technology; and manufacturing and consumer goods. Of the three, the financial-services sector is expected to see the most aggressive growth this year. However, companies are remaining cautious, with 44 per cent expecting to scale back operations this year.

This, in part, is a reflection of the differing degrees of sub-prime exposure of banks.

In the technology sector, 83 per cent of the companies are ramping up or planning to push ahead with growth plans, because they are looking for greater revenue driven by migration of their client base to the Asia-Pacific. But despite growth plans, cost containment remains a key factor in their real-estate strategies.