30% of MNCs interested in Middle East expansion

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30% of MNCs interested in Middle East expansion

A latest corporate survey revealed that 30 per cent of multi-national companies (MNCs) showed increased appetite for expansion in the Middle East, as the region is witnessing a strong population and economic growth.

By Staff Report (abdulbasit@khaleejtimes.com)

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Published: Tue 28 Jan 2014, 1:31 PM

Last updated: Fri 3 Apr 2015, 7:28 PM

As the economic outlook improves, MNCs are demonstrating an appetite for international expansion into new markets and the Middle East is one of the target destination. According to the latest annual European Occupier Survey by global real estate advisor, CBRE, 30 per cent of the corporates surveyed identified the Middle East as a potential destination for expansion in the next two years, a rise from 24 per cent in 2012.

Nick Maclean, managing director, CBRE Middle East, said: “The Middle East is witnessing strong economic and population growth which represents significant investment opportunities for global businesses. Dubai being the region’s commercial and tourism hub remains a focal point in the Middle East and a destination of choice for global corporates looking to expand into this region or the lucrative African market. The World Expo 2020 announcement in November last year has further fuelled this positive sentiment, and over the next six years we will see real estate assets exhibiting strong growth and development.”

The survey, now in its fourth year, polls corporate real estate decision makers at global corporations collectively occupying approximately 2.7 billion square feet (250 million square meters) worldwide.

The survey demonstrates that more than half of corporates (56 per cent) name access to new markets and customers as the principal driver for location decisions. This broad appetite for expansion sees India and Africa emerge as a destinations of choice.

When asked to identify where they intended to expand their operations, 48 per cent named India (double the figure from 2012 at 24 per cent), with China mentioned by 42 per cent, down from 60 per cent in 2012. There is also a significant increase in the number of corporates intending to expand into Africa. This target market is now identified by a third of respondents (34 per cent today), versus a fifth (21 per cent in 2012). In the case of both India and Africa, rapid population and economic growth, coupled with increasing transparency and improving infrastructure, is removing many of the traditional barriers to entry.

The survey shows corporates’ increased confidence in the economic recovery, with less than half (46 per cent) identifying weak economies as a concern. In 2012 the overwhelming majority (70 per cent), reported that the uncertain economic outlook in Europe was a key factor in their real estate strategy, with cost management being the primary objective.

Mark Caskey, EMEA head of global corporate services, at CBRE stated: “As we move into a phase of economic recovery it is clear that occupiers are beginning to look beyond pure cost saving initiatives. In the near term we expect a broad cost saving attitude to prevail, however, it is encouraging that corporates are seeking out new target destinations and adopting increasingly sophisticated workplace strategies.”

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