Property Management VS Corporate Real Estate MAnagement

Table of Content

1.0Introduction..3

2.0Property Management..4-13

3.0Corporate Real Estate Management14-33

4.0Comparison between Property Management & Corporate Real Estate Management..............................34

5.0Reference...35-36

1.0 IntroductionProperty management and corporate real estate management (CREM) are two different kinds of aspects of strategic management discipline in real estate field. In general, property management refers to the administration of residential, commercial and industrial real estate while corporate real estate management refers to success and value-based purchasing, management and marketing of real estate in companies. Many developed countries are following the practice of traditional styles of property management, such as Hong Kong, England and so on. The service of property management can be extensively based on the policies and strategies of a company. Mostly those factors to be in consideration are the function of a building, size, quality, location, age, the background of ownership and the capability of the company. Property managers have to ensure the smooth implementation of the strategies so that value creation can be achieved through the management. By adding in the value to the building effectively and efficiently, a company is able to guarantee great return of profit in the long run. These two kinds of management have the functions of management of properties, however in separated areas and scenario. Corporate real estate management covers a wide range of activities, namely financial planning and management, facilities planning and management, investment planning and management, and construction planning and management. Perhaps occasionally property management is under the umbrella of corporate real estate management or exists as subset to it. Therefore, this report is going to discuss and elaborate both the theories of management thoroughly so that we can get a whole picture for those two areas of management of housing.2.0 Property Management BackgroundProperty managementis the operation, control, and oversight ofreal estateas used in its most general terms. Management shows a need to be cared for, monitored and accountability given for its useful life and condition. This is much akin to the role ofmanagementin anybusiness. Property management is also the management of personal property, equipment, tooling and physical capital assets that are acquired and used to build, repair and maintain end item deliverables. Property management involves the processes, systems and manpower required to manage thelife cycleof all acquired property as defined above including acquisition, control, accountability, responsibility, maintenance, utilization and disposition. (Wikipedia, 2012)According to The Boards of Valuers, Appraisers and Estate Agents Malaysia the Property Management are currently only a registered valuer can practice as a Property Manager. The property manager ensures that the owner gets the best returns of his property investment. They also ensures that the building is well maintained, the building services well looked after and all expenses paid. He is able to optimize usage and enhance the investment in property. He advises on lease renewals, selection of quality tenants and the appropriate tenant mix. (The Boards of Valuers,Appraisers and Estate Agents Malaysia, 2015)The growth of professionalism in property management start during the depression of the 1930s which they had a profound influence on the evolving property management profession. The numerous business failures and real estate foreclosures of this era placed a trust of the nations real estate in the hands of mortgage-lending institutions, such as a trust companies, insurance companies, associations, credit unions and banks. (Robert C. Kyle, 2000)In the first time, a large volume of income-producing property was owned by corporation, many corporations formed their own property management departments. The newly formed management departments employed contractors and builders, but spent little thought and less action on the economics, advertising and merchandising of the income property. These new owners soon learned that a landlord has to do more than select tenants and collect rents, and as the need for more sophisticated management techniques became apparent, the property management profession gained stature. However, few facilities were available for training persons in these vital aspects of property management. (Robert C. Kyle, 2000)Today, more diverse types of properties now under professional management and the increasing variety of ownership entities employed by investors make the need for professional property management skills even more critical. The pressure for managers with sophisticated management skills and extensive technical skills increases daily with the growth in size and complexity of managed property. Continued professional training is there a must if a property manager is to grow and succeed in this profession. A number of organizations have grown to meet the demand for developing standards for the profession and to offer educational programs. (Robert C. Kyle, 2000)Owners who do not live at their properties, or a group of people who share common occupancy, such as an office building, refer to property managers to handle daily care and building operations, efficiently, fairly and under budget. Even though they can work out of their offices, property managers are typically away from their desks showing apartments, checking on maintenance staff or meeting with tenants. (Locsin, 2015)The Roles of the property managers is to ensure that the properties under their care are operate smoothly, maintain their appearance and increase in value of the property. They inspect all facilities, hire, supervise and assign duties to maintenance staff and contract for services such as trash removal or landscaping. They also show properties to prospective tenants or buyers, explain occupancy terms and collect monthly rents; and pay taxes and other maintenance fees. On the administrative side, they ensure that all procedures act in accordance with relevant laws such as the Federal Fair Housing Amendment. They also keep property records and prepare budgets and financial reports for owners. (Locsin, 2015)The specialties roles and job titles of property managers can differ by specialty. Real-estate managers oversee income-producing residential and commercial properties so that investors receive the maximum returns. They handle financial operations, such as tax payments, payroll and maintenance bills. Community association managers administer communal properties such as condominiums so that all residents are treated fairly and pay their fees on time. Onsite property managers are in charge of daily operations on a single property, such as a shopping center. They keep facilities clean and make repairs as needed. Finally, real estate asset managers coordinate the buying, selling and development of real estate on behalf of investors and businesses. (Locsin, 2015)

Property Management Problems and SolutionsFollowing are the common problem faced in the property management and the suggested solutions for each problems (TALLY PROPERTY, 2015) (Haueter, 2014):1. Failure in the PropertyDamage to the property can occur at any time and immediate maintenance or repair jobs need to take place immediately to avoid inconveniences to the tenants.The solution to this problem that may occur is to have a preventive maintenance program in place and have a professional staff to attend the reparation jobs if any damage occur. 2. Complaints from the TenantsComplains from the tenants is like the negative feedback from them. Most complaints are on those to do with the repairs or correcting something on the property. Complains show us things that need to maintain. It can be small or large issues.Solution to this issue is every complain need to be looked into and cannot be ignored. Appropriate actions should be taken so that they feel their voice are being heard. 3. Late PaymentOne of the major problem faced by the property owners the payment or rent is not received on time and tenant has different excuses for it. It can cause profit problem to the owner if it is not handled.The solution to this problem requires multiple pronged approach. Firstly, there should be a person in charge to collect the rent and the tenants should be aware or well informed that they need to have their payments ready on time.The second solution is penalty on the tenants for late payment, which is certain percent of the amount that should be paid. This should be informed to the tenants at the beginning. 4. High Vacancy RatesHigh vacancy rates or seasonal fluctuation can hurt the income to the owner and proper action should be taken.This problem can be solved with the right marketing technique and the proper advertising and good reputation. 5. Low Charging to the TenantsIt is necessary to know the value of the lodgings and analysis should be done on how much the tenants willing to pay. Over charging should be avoided to prevent the loss of tenants.

The benefits of property management1. Higher quality tenantsMost of the landlord who have perform the difficult search for the right tenant to rent the home all the time. Think of tenant screening ,it will definitely have a certainly possible to get a bad tenant out of your home once they are in, but its a real difficulty and you are so much better off never accepting them in the first place. A whole screening process are actually results in reliable tenants that who can pay on time, rent longer, put less wear and tear on the unit and generally cause less problems.By using property management, you will be shielding yourself from rental scams directed at the owners, and discrimination lawsuits resulting from an inconsistent screening process. It is actually also means that we can avoiding bad tenants, scams and lawsuits that it is arguably one of the most significant benefits a property management will provide.

2. Increase the value of the investmentPreventative maintenance is achieved through putting systems in place that catch and deal with maintenance and repair issues early on, before they grow into larger more costly problems. This requires a written maintenance check program, detailed maintenance documentation and regular maintenance visits. The management firm can also offer you suggestions and feedback on upgrades and modifications, both how they will affect the rent you can charge, as well as their impact on maintenance and insurance.

3. Personal benefits for ownersFirstly, there will have less stress like avoid having to deal with middle of the night emergencies, chasing down rent, evicting people from the owners property, tenants who wreck the property, rental scams, lousy vendors and piles of paperwork.Secondly, there will have more freedom in managing the owners property. Live and invest wherever you want with the constraint of needing to be near your properties. Additionally you can live and travel without the requirement of always being available in the event that your tenants have a need you have to tend to. Once you have found a good management company, it doesnt matter if you live in the same state. Some landlords live in other countries and simply collect their check every month without ever seeing the property.Lastly, it will free up more of your time. For an example, time is money, and for many investors, their time can be more profitably spent in areas other than servicing their properties.

The graph above shows the time affects the cost of project.

4. Security and safety of property management Commercial and residential property management and life safety integration: building critical infrastructure and facility life safety features. Emergency response of the building operation:hazardous materials, fire evacuation, medical emergencies, extreme weather, evacuation and shelter in place, H25, 02 C02, suspicious packages, and bomb threats. Fire safety plans :Fire and human behaviour, building or facility fire warden roles and responsibilities. Arriving the fire, police and EMS priorities and expectations, lessons learned and common challenges during evacuations.

5. Maintenance managementThe objective of maintenance is as a priority one, to create an availability performance which is suitable for production demands in the organization. The term maintenance covers all activities undertaken to keep equipment in a particular condition or return. It to such condition. Deferred Maintenance includes the repair, rehabilitation, or replacement of facilities and damaged heavy construction and agricultural equipment with shortened utility because we have not performed maintenance. Bath Tub CurveThe bath tub curve describes the cost of equipment over its lifespan. From commissioning to winding up.

Cost

100% Life Time

3.0 Corporate Real Estate Management Definition of CREMCorporate Real Estate Management which is known as Public Real Estate Management (PREM) in the semi-public sector, is one of the central tasks of managing the real estate portfolio of a company, corporate group or a public institution. (G&K Management Berater, 2015) Initiation To CREMMany corporate groups want to reduce the amount of capital which is tied up in real estate. They want to invest more capital in the core business. In view of cost pressure and ever-shrinking budgets, local authorities have similar aspirations. As a consequence, they think about selling their real estate. One solution is to launch a process to establish a real estate portfolio with the aim to generate added value through creation of transparency and improvement of cash fees. The tied-up property should be made available through reduction and an optimizing process. The idea of CREM has been presented about an integrated concept and the realization of real estate portfolio management. (Dietmar SPERLING, 2005)In view of today's globally difficult economic situations more and more groups of companies realize that their real estate property does not belong among the core business anymore. Therefore, an ever-growing number of major companies is concentrating on their original business with which the value-added process is highest. In order to remain competitive, most of enormous companies detached themselves from real estates ( Buildings, Lands) in order to reduce their capital will be offered on the market in the coming years as it already initiated a couple of years ago due to real estate was regarded as an inalienable property and inviolable reserve. (Dietmar SPERLING, 2005)However, the sale of large property holdings, however, can be very problematic for companies, because in many cases their real estate assets have been dealt with poorly. Often enough, the management does not even know about the properties sizes and/or market values. That can sometimes lead to disasters. (Dietmar SPERLING, 2005)Monitoring company performance has traditionally been associated with accounting, and the purpose has been to determine a companys financial success. Success has been judged via comparison to previous years results and various key indicators, such as return on investment, turnover and net profit. This has also been the case in the context of corporate real estate management (CREM). Historically, corporate real estate managers have tended to measure performance from an operational efficiency perspective factors such as operating costs, costs per square foot and maintenance cost. (Steffenhartmann et al., 2009)The current situation of companies requires a group-wide adoption of responsibility for the real estate management. In this process the following tendencies can be observed: (Ranko Bon, 1994) The globalization of the markets provides increasing competition pressure associated with a growing influence of the financial markets on the management. According to a regulation of the European Commission of 19th July 2002, all listed companies must prepare consolidated accounts in compliance with IFRS (International Accounting Standards) by 2005 at the latest. Thus real estate has to be shown in the balance sheet at market value. This fact may have serious consequences for the property, financial situation and profits. The appearance and strategy of companies undergoes sudden changes because of the surge of mergers and acquisitions. - Basel II (that implements an EU directive) requires a new quality of risk transparency and risk management, in order to obtain more favourable conditions on the capital market. These tendencies lead to challenges on the real estate management as follows: Reduction of the capital tied up in real estate and cost minimization in the use of real estate for financial benefit Creation of transparency in the stock of real estate and in its utilization Efficient setup of a stock of strategically important real estate and liquidation of strategically insignificant property Value adding in real estate management and transparency and follow-up of property risks. These statements go to show how changeable the world of real estate has become and what great efforts will have to be made to pursue real estate policies that facilitate successful business. While up to now the focus was on growth, on securing the companys location and the development of secret reserves, there will be a shift to portfolio optimization, minimization of space requirements and reduction of the additional costs in future.

Introduction of CREMThe basic principles of a successful real estate policy are a customer-oriented organisational structure as well as the creation of efficient business processes. This goes along with a concentration of responsibilities within a group or company that includes the requirements of internal and external customers. Only that way a readjustment of real estate affairs is achieved, which allows to stick to the core business. Comprehensive services are offered from a single source that brings about higher quality and improvement of the efficiency. This leads to an organizational adaptation, which consists in the creation of a central CREM board with a strong orientation to the company management policy. This board places requirements on the operational sectors such as project development, facility management, purchasing and sales departments. Further subordinate service units that need to be set up are valuation, property management and project controlling. Objective of CREMThe significant objective of CREM is the creation of a return from real estate without distracting the focus from the firms core business. Furthermore, CREM should make a contribution toward the strength and competitiveness of a company by ensuring that company-owned resources are used effectively. In short, increase profitability of the company from both core and non-core operations. (Steffenhartmann et al., 2009)

The Criteria of CREMIn future, the classification of real estate will have a stronger focus on the features of efficiency and usability than in the past where the emphasis was rather on operational necessities. As a first step of assessment it is necessary to prepare all areas of land in terms of real estate development, then to review the usability of sites and sub areas (such as reserve areas) as well as the profitability of sites and sub areas (for example power station sites), and finally, to match site-specific identifiable potentials. (Dietmar SPERLING, 2005)Existing procedures of exploitation and optimization show clear limits, too. The present approaches of individual or block sales or the issue of closed or open funds offer the client advantages and disadvantages. However, an inter-company joint property product could turn problems into opportunities. In this context one could think of closed funds focussing on high-quality items in a perhaps suboptimal location (for example head offices of great companies). This way, thanks to common interests, deconsolidation with regard to the intention of long-term lease (high credit standing of the tenant) can be achieved through reduced share property. (Dietmar SPERLING, 2005) The principles of CREM ( Based on Research conducted by Professor Ranko Bon)Professor Ranko Bon is a Professor of Construction Management and Economics in the Department of Construction Management & Engineering at the University of Reading. He was headed the department from 1996 to 1999. In the year 1994, he conducted a research on CREM. Then, Professor Ranko Bon has distilled what he sees as the central principles of corporate real estate management into ten concise points of CREM principles:1. Corporate real estate management (CREM) concerns the management of buildings and parcels of land at the disposal of private and public organizations that are not primarily in the real estate business. An organization that occupies space is in the real estate business and needs to manage it properly. CREM covers the entire range of activities concerning portfolios of buildings and land holdings: investment planning and management, financial planning and management, construction planning and management, and facilities planning and management. The chief real estate officer (CREO) is the top executive concerned with an organizations property and needs to integrate all these activities into a coherent strategy. 2. Just as a fleet of ships requires overall strategy and co-ordination among individual vessels, so too does a fleet of buildings. Although each vessel in a fleet may have a separate mission, the fleet as a whole is informed by a mission common to all. This mission stems from the strategic objectives of an organization. The primary concern of CREM is to establish and maintain a close match between an organizations business and property strategies. 3. The possible courses of action differ for buildings and parcels of land in different parts of an organizations portfolio. Conversely, the very structure of the portfolio should reflect alternative courses of action that apply to different classes of real property. One of the most important functions of CREM is to keep an account of the options available for various components of the portfolio. This information can be used as the basis for detailed contingency planning for properties that are the best candidates for disposition or significant reconstruction. 4. Each property is going through the real property cycle, starting from and returning to unimproved land. In some cases the real property cycle involves shortcuts and detours of various kinds. The stage in the cycle in which a particular property may be found needs to be understood in the light of other cycles which are important to an organization, such as product and/or process cycles. CREM is concerned with the entire real property cycle of each property in the portfolio, although it focuses on the utilization and operation stage. More precisely, it is concerned with the relationship between the real property cycle and other strategic cycles characterizing the organization in question. 5. The opportunities to influence the costs and benefits of building ownership decline most rapidly in the planning and design phases of the building process. CREM tools need to be applied as early in the real property cycle as possible. The information available to an organization concerning its good and bad buildings is invaluable in guiding both new construction projects and repair and reconstruction projects. As the real property portfolio of each organization differs considerably from any other portfolio, each organization needs to develop and maintain a database with information specific to that organization.6. The primary operational task of CREM is to provide approaches and tools that facilitate the formation and maintenance of a feedback loop between real property performance across the portfolio and managerial action. The feedback loop opens the road towards continual incremental improvement of real property performance, guided by the ever-changing objectives of an organization. Continual incremental improvement that is always in line with changing organizational goals is the theory behind CREM. It focuses on the provision of tools that would help change an organizations real property portfolio in the right direction, while relying on the business strategy for determining what direction is right for the organization. The information concerning property performance available to an organization should be arrayed so as to ensure that its management can learn about the consequences of their actions on real property performance, as well as the effect of real property on the overall performance of the organization. 7. CREM requires effective monitoring of property performance by means of a system of property performance indicators. For a given budget, there is a tradeoff between many indicators measured a few times, and a few indicators measured many times. The latter is generally preferable to the former, because management is generally more interested in relative change than in absolute values of performance indicators.

8. As in manufacturing, the objective of statistical quality control (SQC) is to ensure that actual property performance is within the desired bounds upper and/or lower. These bounds can be tightened over time. In the case of properties, SQC should be applied with special care. First, cross-sectional comparisons of buildings are difficult because of their heterogeneity; even identical buildings at different locations will appear to be different. Second, longitudinal comparisons of the same building at different points in time are difficult because many building processes are very slow; everything will appear to be the same even over long periods of time. 9. Because one of the key concerns of CREM is the maintenance of a continual ability to adapt to changing economic conditions facing an organization, the structure of real property performance indicators should correspond to the structure of the portfolio itself. The management of adaptability and flexibility should not be narrowly directed only towards individual buildings. The problem arises on at least two additional levels that of a cluster of buildings, and that of the portfolio as a whole. Furthermore, on all three levels there are distinct aspects of the problem: physical, financial, and organizational. Physical aspects predominate on the level of individual buildings; financial aspects predominate at the portfolio level; and organizational aspects are especially important at the building-cluster level. Again, all these aspects of CREM need to be integrated by the CREO into a coherent property strategy. 10. Real property performance should be measured with the objective of gradually changing the character of the entire portfolio via continual managerial action bent on improving real property performance. The key objective is to improve the overall performance of the portfolio by shifting the average performance in the direction of improvement, as well as to tighten the variation around that average performance. Good and bad performance are relative notions. The best performance in one period may be considered to be the worst in another. Moreover, at any one time there will necessarily exist both good and bad buildings. Benefits or advantages of CREMCorporate Real Estate Management (CREM) has always been a valuable asset on corporate balance sheets, even if many companies do not realize this is the case because lack of prominence. Maximizing the value of real estate has become an increasingly important competitive factor in the ongoing globalization process. Various industry research studies over the last ten years indicate that more than 25 percent of corporate assets are invested in real estate and that total occupancy costs of corporate real estate represents 5 percent to 8 percent of total (pre-tax) gross sales, or 40 percent to 50 percent of net income. (Steffenhartmann et al., 2009)A major task of CREM is to identify strategic challenges focusing the company and to manage their effects on corporate real estate. The planning and decision horizon of CREM therefore is concentrated on the development of long-term potential for success. CREM should identify and evaluate the economic and technical trends driving the firms real estate portfolio, improving the firms competitiveness. Moreover, a study by Asson in the Journal of Corporate Real Estate explained that in addition to the financial optimization of real estate portfolios, this form of cooperation leads to greater flexibility, cost certainty, and higher service quality. (Steffenhartmann et al., 2009)The existence of a property database that provides adequate and timely information (such as business needs, staff requirements, facilities, occupancy costs and market data) is essential for facilitating effective strategic planning of corporate real estate. (G&K Management Berater, 2015)One study in United State concluded that competition is forcing companies to examine both their assets, especially corporate real estate and their processes in order to increase market share, maintain competitive positions, and increase shareholder value. Thus, research recognizes the significant value of real estate (to non-real estate firms). But in spite of this recognition, corporations continue to under-manage real estate assets and resources. In part, this is because corporate real estate management (CREM) departments lack prominence in most companies. As a result, this valuable part of corporate balance sheets goes largely unnoticed and undermanaged. So, in order to establish the importance of corporate real estate, it is necessary to define the role of CREM in a company (Steffenhartmann et al., 2009) Challenge for CREMFinancial education and performance standardization within the field of corporate real estate management must improve both at the upper echelons of executive management, and within the CREM departments. Without a proper understanding of the financial and operational impact of corporate real estate on company balance sheets, senior management will continue to own their corporate real estate. In turn, decisions on how to manage that real estate, whether owned or leased, remain based on flawed reasoning. (Steffenhartmann et al., 2009)On the one hand, some members of the Corporate Real Estate Management and Facilities Management Forum (Professor John Hinks, July 2013) argued that real estate is still where most people go to meet, discuss ideas, innovate and to get their work done. Notwithstanding that technology is reducing business reliance on physical work environments, they argued that real estate looks likely to continue to play a major role in businesses that continue to trade through their spaces. (This was also the argument for banks and high street retail a few years ago of course.) But in such circumstances, the role of the CREM&FM function will continue to be to provide the best environment in which the business can function, at a reasonable cost. (Professor John Hinks, July 2013)In other words a continuation of the demand profile upon which the industry was built, albeit at a smaller and possibly shrinking scale. The implicit argument here was that further sustaining improvements were all that was needed. Indeed it was suggested that this was the default trajectory, wherein the CREM&FM industry will mature along the same lines other support service functions have. (Professor John Hinks, July 2013)According to the study of Realizing the Value Of Corporate Real Estate Management (Steffenhartmann et al., 2009), while survey, respondents indicate that CREM performance has improved over the last several years, it is unclear what metrics they use to arrive at that conclusion, given that in some cases, they work independently, while in other industries basic financial metrics were not referenced in terms of measuring the opportunity cost of corporate real estate. Despite a growing body of research on best CREM practices, the under-management of corporate real estate assets continues. Inadequate attention is paid to resource allocation, and the skill sets required to effectively manage key functions of CREM are lacking. (Steffenhartmann et al., 2009)In addition, the inability to define the role of corporate real estate, combined with the inability to measure the lost opportunity cost of corporate real estate, obscures senior managements view of the underlying value which is locked into many corporate real estate portfolios. Among CREM staff, real estate is still primarily viewed as a cost centre, which further supports evaluating corporate real estate from the perspective of both the balance sheet and operating resource allocation. Corporate real estate is not a core business of these firms. However, regardless of whether companies recognize it or not, corporate real estate remains a valuable and under-utilized asset (Dietmar SPERLING, 2005)

Strategies in Corporate Real Estate Management

There are many strategies implemented in corporate real estate management (CREM), based on several different approaches. One of the strategy models is presented by the METIS Management Consulting (METIS), which is based in Munich and established in early 2006. METIS is a specialized professional service firm that supports financial institutions in securing and developing their market positions. (METIS Management Consulting, n.d.)The following figure shows the strategy model used in CREM.

Source: (METIS Management Consulting, n.d.)

BUSINESS STRATEGYCorporate real estate have direct correlation with business objectives (METIS Management Consulting, n.d.) therefore it will give direct impact to the success of the company. Corporate real estate managements involvement in the overall strategy process is thus a crucial matter.The strategy could be executed through systematic planning between real estate related business activities and the corporate strategy itself.A systematic planning of all real estate related business activities and a regular adjustment with the corporate strategy to work well together will ensure a maximum utilization of potentials within the operational real estate portfolio.At this stage of strategy, the challenge particularly to be met is to link mostly long-term real estate decisions with a corporate strategy that has to flexibly adapt to a rapidly changing environment. (METIS Management Consulting, n.d.)

REAL ESTATE STRATEGYThe second stage in CREM strategy is to focus on the real estate. Most financial institutions have already provided the basis for a strategic management of the resources by collecting the relevant data of its corporate real estate portfolio.However, an explicitly formulated real estate strategy is often missing. METIS Management Consulting stated that even if such a strategy exists, it lacks the institutionalized link with the corporate strategy and does not operationalize specific goals and objectives for middle management and staffs.Real estate strategy basically focus on the operational and non-operational factors in real estate where CREM is implemented in the operational elements while Real Estate Asset Management is implemented for the non-operational elements.

DEVELOPMENT & MANAGEMENT STRATEGYDevelopments and management strategy covers both operational and non-operational elements in the portfolio. Operational aspects in the management strategy includes space requirements, cost or benefits, build, buy or rent, and financing. Meanwhile, non-operational aspects are income or risk, the strategy to maximize earnings, evaluation and sales.Strategic space management plays a central role in specifying and operationalizing real estate strategy. Apart from that, under development strategy, buildings, projects and concepts utilization are developed. For example, innovative branch and office usage concepts are developed and implemented as well as precise targets for improving space efficiency are also set. (METIS Management Consulting, n.d.)In other word, a successful CREM has to be timely linked with the corporate strategy development process. This means that CREM tasks do not only comprise the identification and evaluation of relevant trends affecting the companys competitive position, its productivity and the interests of shareholders.

FACILITY MANAGEMENT STRATEGYFacility also play an important role in CREM. Facility management strategy focuses on the organization, processes, services, service-levels and costs of the facilities available in the portfolio. Emphasizing on the outcomes from the facilities alone will also contribute to the success of CREM.

Figure 1: The Strategy Model of CREMSource: (Anna-Liisa Lindholm, January 2006)

Added Value of Corporate Real Estate ManagementBusiness FocusTraditionally CRE as decision concerning and focusing on cost factor consideration only. But nowadays CRE contribute to overall business performance. CREM contribute to the core business than cost- control. The CRE also consider the communications and working relationship with management to a top-performing real estate department and not only focusing on cost minimisation.

The contribution of transformation of real estate by reformulating facilitating operations to increases productivity, more clearly identify increasing value as strategy, highlighting changing culture by introducing workplace, and grouping a range of real estate decision under risk control.

Workspaces already become a important elements of CREM after the compensation and benefits, as well as location of the site choosen for financial success, taskmaster through dealmaker, entrepreneur and controller of business strategist will addressed company competiveness.By using the CRE strategy to support organisation, they mostly have clear vision which of aim they want to create with their building and they can even perform efficiently by using 5 stages of CRE development.CREM also allow the managers to track performance, and let the employees know what is they expected if they want to get rewards by reaching the employer targets.Asset Management FocusReal estate used to be a production factor. Many corporation have chance to increase their profitability through more effective management of their real estate and to actively manage to achieve corporate goals by focusing on using an approach that treat the interactions of real estate with the capital structure, capital cost, debt capacity and overall operations of firm.Company financial success normally determine by comparing result by various key indicators such as return on investment, turnover and net profit to compare with previous year with accounting. The corporate real estate managers tended to measure performance from an operational efficiency perspective such as cosy per square foot, maintenance cost and also operating cost. There are several type of measures of CREM showed in table below.

Most corporate real estate and facilities management sources provide oversight of common performance indicators, which usually represents operation view of these discipline. The little literature above showed that the every aspect of CREM and facility management, tactical and operational, namely strategic and especially tie up CREM to the organisational strategic decision making.Financial FocusIn the financial aspects, the real estate may provide other forms of added value for example effectiveness and efficiency of the activities in the corporation even though the return on real estate is generally lower than the return on the core business.CRE have significant impact on the firms credit facility, its operating economics and its financial statements in the property investments. Real estate also able to affecting many corporate financial parameters such as cost of debt, cost of equity, systematic risk and market-to-book ratio of non-real estate firm. So it is necessary for the real estate to corporate financial management and its important.Real estate have great impact of corporate which can impact in corporate performance by cost reductions or improve revenue.CREM also able to improve the stock market values, an also able to often accounts for a significant portion of firms total assets or working capital.4.0 Comparison between Property Management & Corporate Real Estate ManagementScopeProperty ManagementCorporate Real Estate Management

ObjectivesBuilding maintenanceStrategic real estate activities to support the business operation

UsersBuilding occupies/ tenantsStakeholders

SkillsProperty specialist, business administration and engineeringProperty specialists with financial and management background

Level of ManagementTactical/ operationalStrategic/ tactical

ActivitiesDay-to-day basis; administrative management, marketing and physical managementThe management of all aspects of real estate; acquisition and development, disposition, property management, financial analysis, surplus property, and miscellaneous activities such as leasing and brokerage

ManagementProperty ManagerCorporate Real Estate Manager

(Source: Ali, Zaiton. (2008), Corporate Real Estate: Another Real Estate Area)

5.0 References

Anna-Liisa Lindholm. (January 2006). Measuring the Added Value of Corporate Real Estate Management. Finland: Institute of Real Estate Studies, Helsinki University of Technology. Retrieved from http://lib.tkk.fi/Diss/2008/isbn9789512293605/isbn9789512293605.pdfDietmar SPERLING. (2005). Corporate Real Estate Management (CREM). TS5.2 Corporate Real Estate Management (CREM) , 16-21.G&K Management Berater. (2015). Retrieved from Grgen & Kller GmbH: http://gk-mb.com/history/?lang=enLindholm, A. L. (2008). Identifying and Measuring the Success of Corporate Real Estate Management.Locsin, A. (2015). The roles of Property management. Retrieved from Chron: http://work.chron.com/role-property-managers-11347.htmlMcDonagh, J. (21 January 2002). Measuring Corporate Real Estate Asset Management Performance. Seventh PRRES. Canterbury.METIS Management Consulting. (n.d.). About Us. Retrieved 2015, from METIS Management Consulting: http://crem-performance.com/en/metis_en.htmlMETIS Management Consulting. (n.d.). Strategy. Retrieved 2015, from METIS Management Consulting: http://crem-performance.com/en/strategie_en.htmlProfessor John Hinks, H. o. (July 2013). CORPORATE REAL ESTATE MANAGEMENT AND FACILITIES MANAGEMENT FORUM. Zurich (pp. 1-28). Hamshire, UK: Zurich Insurance Group Ltd.Ranko Bon. (1994). Ten Principles of Corporate Real Estate Management. Corporate Real Estate Managemen, 9-10.Robert C. Kyle, F. M. (2000). Property Management (sixth edition). In F. M. Robert C. Kyle, Property Management (sixth edition) (p. 14). Chicago: Dearborn Financial.Steffenhartmann et al. (2009). Realizing The Value Of Corporate Real Estate Management. pp. 21-33.The Boards of Valuers,Appraisers and Estate Agents Malaysia. (2015). Role of Registered Valuers, Appraisers and Estate Agents. Retrieved from The Boards of Valuers,Appraisers and Estate Agents Malaysia: http://www.lppeh.gov.my/role.phpWikipedia. (July, 2012). Property Management. Retrieved from https://en.wikipedia.org/wiki/Property_managementWurdemann, W. W. (2012). Corporate Real Estate Performance: The Added Value Measured. Retrieved from http://www.tias.edu/docs/default-source/Kennisartikelen/corporaterealestateperformance_wouterwurdemann.pdf?sfvrsn=6

Haueter, R. (2014, August 16). Chandler Property Management | Potential Problems in Rental Real Estate. Retrieved from Caldwell Property Solutions: http://caldwellaz.com/chandler-property-management-potential-problems-rental-real-estate/

TALLY PROPERTY, I. (2015). 4 Common Issues in Property Management and Their Solutions. Retrieved from TALLY PROPERTIES: http://talleyproperties.com/blog/4-common-issues-in-property-management-and-their-solutions.html

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