Opening door to property domination

Alastair Hughes

Real estate advisory firm Jones Lang LaSalle has launched a full service in Vietnam following its confidence in the nation’s political stability and property market growth potential. VIR talks to the firm’s Asia-Pacific chief executive officer Alastair Hughes about the firm’s future plans.

Could you give us a quick update of the company around the world and in Vietnam?

Jones Lang LaSalle is a publicly owned company, listed on the New York Stock Exchange. Whilst most of our competitors in Vietnam are franchised, we are a 100 per cent corporate owned business. In order to run our firm in a consistent and professional manner world-wide, we don’t form affiliations, joint ventures or franchises in any market, this means that each Jones Lang LaSalle office is 100 per cent owned by us.

Jones Lang LaSalle is one of the leading commercial property services firms in the world, providing investment management and integrated real estate services to our occupier and investor clients, we also do a lot of work with governments. In Asia-Pacific we employ over 20,000 staff in 80 offices around the region. Our range of services that we have recently launched in Vietnam include agency leasing, residential sales, property and asset management together with our other established services lines comprising tenant representation, valuation, research and consultancy, capital markets, project management and integrated facility management.

Jones Lang LaSalle has been in Vietnam for almost five years and just officially launched its full services in the market recently. What are possible reasons for this move?

Vietnam is one of our top growth markets and we are growing quickly here. We believe that the Vietnam economy and its property market will expand rapidly over the next five to 10 years and our research underlines this growth potential.

We have built our business slowly in Vietnam and it has taken some five years to offer a full range of services. It is possible for large companies to open many offices all over the world by franchising their name and just taking a little bit of money from each location, but Jones Lang LaSalle does not grow in that way. Over the last five years, it has been building businesses in big growth markets like India and China, we are now dominant in both these markets. We see the same opportunities in Vietnam as we did in India five years ago and it is our intention to take advantage of the potential growth in this market.

What do you think about recent macroeconomic challenges Vietnam now faces?

Political stability in Vietnam will allow us to grow our business over the next five years and means that we can plan with confidence for the future, this coupled with good fundamentals in the real estate market makes it a good time to invest in Vietnam.

An increase in productivity from a growing population together with more investment will provide a solid base for Vietnam’s domestic economic expansion over the next five years. Vietnam’s government is focused on economic stability, rather than growth at any cost. This bodes well for the long term growth of Vietnam, the current consensus forecast for growth in 2012 is 7 per cent. The manufacturing sector continues to expand and export growth was up at over 37 per cent year-on-year in April, based on goods such as footwear and textiles, the country is also moving up the value chain into computer and electronic components. Improvements in government policy to stabilise the economy, coupled with further investment and production, may lead to a lower level of inflation in the next five years. An economy which has a rising share of fixed investment, builds capacity to have greater growth in the future. Fixed investment continues to rise and is expected to reach 41 per cent by 2015, putting Vietnam on a par with India and close to China’s 45 per cent share of gross domestic product spent on investment. This rate of investment should build productive capacity and keep high growth rates beyond 2015

Many property consulting companies have been involved in the market for a long time, so how is Jones Lang LaSalle going to win further market shares in this current context?

Five years ago, our clients did not have Vietnam on the map, but now more clients are setting up offices and doing businesses here. We often enter new markets on the back of multinational clients, as we did in China, now many years later we have a big business there, still acting for large international companies but also working with local and government-owned developers. Whilst we currently have more international clients than local clients in Vietnam, we are getting to know local partners and are growing the services we offer to accommodate both local and international clients.