CBRE: India beats China as ‘top choice’ for corporate expansion plans
Jan 30, 2014
Source : The Hindu

AHMEDABAD: Corporate decision-makers are responding to signs of economic improvement across Europe, shifting the focus away from pure cost management to future growth opportunities, with an increased appetite for global expansion into Indian markets.

Asked to identify where they intended to expand their operations, about 48 per cent named India, compared to 24 per cent in 2012-13, and 42 per cent preferred China, down from 60 per cent in the same year, according to CBRE’s latest annual European Occupier Survey.

Rapid population and economic growth, coupled with increasing transparency and improving infrastructure, is removing many of the traditional barriers to entry into the India market.

The annual survey was conducted in-house by CBRE to analyse the latest occupier real estate trends. This year, over 70 corporate occupiers responded to the survey. They represented leading corporations covering a range of sectors, with the banking and finance (22 per cent) and technology and telecommunications (20 per cent) subsets forming the largest groups, and a further 14 per cent constituting the manufacturing sector.

The survey, now in its fourth year, is conducted by corporate real estate decision-makers at global corporations, collectively occupying approximately 2.7 billion sq. ft. (250 million sq. m.) worldwide. It shows corporates’ increased confidence in the economic recovery, with less than half (46 per cent) identifying weak economies as a concern.

As the economic outlook improves, multinational companies are demonstrating an appetite for international expansion into new markets. The survey demonstrates this with more than half of the corporate respondents (56 per cent) naming access to new markets and customers as the principal driver for location decisions. This broad appetite for expansion sees India emerge as a destination of choice.

A third of respondents, at 34 per cent, now intend to expand into Africa, vis-à-vis 21 per cent in 2012-13. In the case of India, rapid population and economic growth, coupled with increasing transparency and improving infrastructure, is removing many of the traditional barriers to entry, the survey suggested.

The opportunities presented by rapid growth in India may now help overcome some of the longstanding barriers — governance, infrastructure, bureaucracy, and lack of transparency — that have inhibited inward investment. India has already attracted a large number of occupiers from a range of sectors, including financial and business services, media, technology and telecommunications, and pharmaceuticals. This has been supported by a general process of deregulation and a range of specific Government initiatives designed to attract foreign investment, such as relaxation of rules on foreign ownership, streamlining of the development process, and promotion of high-tech growth industries.

Improved international and domestic infrastructure connections have supported growth in many cities, including Mumbai’s financial cluster and the economic hub of the Delhi National Capital Region. Growth in the technology sector has particularly contributed to this phenomenon.

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