The Way I see the Building & Real Estate Industry - A ... · Public sector: Government and quasi-government organizations Higher demand of services by the publicÆincrease the daily

Subtitle

The Way I see the Building & Real Estate Industry -A Local and Global Perspective of

Accomplishments, Challenges and Directions for Surveyors

Date:March 6, 2009 (Friday)

Time:6:30 – 8:00pm

Venue:Chiang Chen Studio Theatre,The Hong Kong Polytechnic University

Speaker:

The Way I see the Building & Real Estate Industry -A Local and Global Perspective of Accomplishments, Challenges and Directions for Surveyors

Mr. Kam-hung YuSenior Manager DirectorValuation & Advisory Services Greater ChinaCB Richard EllisFHKIS FRICS RPS(GP) FHIREA

CB Richard Ellis | Page 3

Flowchart

1. Real Estate Development Process

2. Local vs Regional vsGlobal

3. Opportunities and Challenges

4. Our Future


Demand and Supply of Land

Demand for various uses: Housing, Working, Tourism…etcChange of Harbour (Reclamation)Change of Green Area

How to balance

???Back to Flowchart


Public consultationMaster planning / Economic planningFormulation of the land use patternDevelopment density controlSite boundary formationFeasibility study of the landLand allocation via various methods

Others:Town Planning ApplicationLand administration Inputs- Land exchange, Lease modification,

Payment of Premium

Main Professional Involved:Main Professional Involved:PlannerGeneral Practice Surveyor Land Surveyor

Town Planning

Back to Flowchart


Real Estate Financing and Site Acquisition

Carry out development feasibility studyForm optimum development schemeSite ValuationSite acquisitionCarry out financial analysisPreparation of budgetsFormulate optimum capital structure

Main Professional Involved:Main Professional Involved:ArchitectFinancial AnalystGeneral Practice SurveyorBuilding SurveyorAccountant Back to Flowchart


Back to Flowchart

Development Design

Preparation of budgets and master planFormulate design and layoutSubmit building plansConduct Market Study

Main Professional Involved:Main Professional Involved:ArchitectEngineer Quantity SurveyorGeneral Practice SurveyorBuilding Surveyor Arbitrator


Procurement

Tendering and ProcurementBudgeting and Cost estimationInsurance and contractual advice

Main Professional Involved:Main Professional Involved:Quantity Surveyor ArchitectEngineerArbitratorGeneral Practice SurveyorBuilding Surveyor

Back to Flowchart


Development and construction project managementFinancial management – progress payment and claims settlementDesign amendments and drawings submissionConstruction Monitoring – Time, Cost and QualityFinal Account settlementDispute settlement

Main Professional Involved:Main Professional Involved:Architect Quantity SurveyorEngineerBuilding Surveyor Arbitrator

Project Development and Construction

Back to Flowchart


Marketing

Evaluate the market situation and conduct researchFormulate the marketing planConduct marketing campaignFormulate Property Management Strategy

Main Professional Involved:Main Professional Involved:General Practice SurveyorProperty and Facility Management SurveyorProperty Agent / Marketing Expert

Back to Flowchart


Legal Formality

Obtain various approvals and documents from governmentAdvice on various building control measures

Main Professional Involved:Main Professional Involved:Legal ProfessionalBuilding SurveyorGeneral Practice Surveyor

Back to Flowchart


Design optimum tenant-mix and maintain optimum tenant ProfileBuilding and Facility Maintenance and ManagementBuilding SafetyRefurbishment and renovationLicense applicationEnhancement the building valueCorporate Real Estate management

Main Professional Involved:Main Professional Involved:General Practice Surveyor Property and Facility Management SurveyorBuilding Surveyor

Asset Management

Back to Flowchart


Determine the needs for redevelopmentFeasibility study on redevelopmentCompulsory SaleLand ResumptionMaster Planning

Main Professional Involved:Main Professional Involved:General Practice SurveyorPlanner Building Surveyor Land Surveyor

Redevelopment

Back to Flowchart

Local vs Regional vs Global


Local:• Private sector (Developers, Institutional Companies, Investors

and Consultancy firm)• Public sector (Government and quasi- government

organization)

Regional:• China market• Other Asian cities

Global:• EMEA• North AmericaOthers

Local vs Regional vs Global


Local MarketLocal:

Last decades: real estate profession prospered due to blooming economy of Hong Kong, which was real estate-driven

Last decades: real estate profession prospered due to blooming economy of Hong Kong, which was real estate-driven

1997 Asian Financial Crisis: the rate of economic growth dropped significantly and property market suffered from a long downturn period

Demand for properties dropped significantly

Oversupply of real estate-related professional services

1997 Asian Financial Crisis: the rate of economic growth dropped significantly and property market suffered from a long downturn period

Demand for properties dropped significantly

Oversupply of real estate-related professional services

2003: HK’s economy was recovered

2003: HK’s economy was recovered

Total No. of Transactions

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008T

otal

no. o

f tr

ansa

ctio

ns

(Dom

estic

Units)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Tota

l no. of

tra

nsa

ctio

ns

(Off

ice,

Com

mer

cial

and

Fla

tted

Fac

tori

es)

Domestic Total Office Commercial Flatted Factories

Hong Kong GDP and GDP Growth

0200,000

400,000600,000800,000

1,000,0001,200,0001,400,000

1,600,0001,800,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

Year

GD

P (H

K$

mil

lion

)

-5

-3

-1

1

3

5

7

9

11

Year

-on-

year

% c

hang

e in

nom

inal

ter

m


Local Market – General Practice SurveyorPrivate sector: Developer, Investors and private consultancy and institutional firmsPrivate sector faces “cut-throat competition”75%

25%

Private SectorPrivate Sector

Public SectorPublic Sector

Public sector: Government and quasi-government organizationsHigher demand of services by the public increase the daily duties and workloads of professionals in the public sectorThe job nature of the non-civil-service contract (“NSCS”) staff and civil servants is almost identical, but their remuneration package and benefits are significantly differentSalaries of new civil servants are geared to their civil serviceexperiences only, but not those in private sector


Local Market – General Practice Surveyor

Institutional FirmsDevelopers / Investors

Consultancy FirmsPrivate SectorPrivate Sector

Quasi-government OrganizationGovernment Organization


GPGP

Sales & MarketingSales &

MarketingValuation,

Consulting & Advisory

Valuation, Consulting &

AdvisoryProperty

DevelopmentProperty

DevelopmentAsset and Facilities

Management

Asset and Facilities

Management


Local Market – General Practice Surveyor

General Practice Surveyor:General Practice Surveyor:Challenges:Challenges:

Rapid Changing Environment??

Rapid Changing Rapid Changing Environment??Environment??

More Demand??More Demand??More Demand??

Strong Competition ??

Strong Strong Competition ??Competition ??

Limited Job Opportunities???

Limited Job Limited Job Opportunities???Opportunities???


Local Market – Planning and Development Surveyor

P&DP&DP&D

Property Development

Property DevelopmentPlanningPlanning

XInstitutional FirmsDevelopers / Investors




Confidential ProjectsConfidential ProjectsConfidential Projects

Confidential ProjectsConfidential ProjectsConfidential Projects


Local Market – Planning and Development Surveyor

Planning and Development Surveyor:Planning and Development Surveyor:

Director of planningAO grade government official, with AO type training

Developers / Investors

Strategic directorWith foresight and planning and development knowledgeInvolve in planning stage as well as property development stage

Government Organization/

Quasi-government Organization

Role of SurveyorRole of Surveyor


Local Market – Building SurveyorBuilding Surveyor:Building Surveyor:

Private Private vsvs Public:Public:Salary level of BS working in private sector: about 3/4 of public sector in generalPrivate Practice was more active since 1990’s when more owners know BS more and more jobs were outsourced to private sector by the GovernmentJobs in private sector are more diversifyDifficult to switch between private and public sector Experienced BS working in public sector for long time may not able to catch up with the private sector practice since it requires diversified areas of knowledge

NOWNOW

19701970’’ss

Public Public SectorSector

Private Private SectorSector

Private Private SectorSector

Public Public SectorSector


Local Market – Building Surveyor

Building Surveyor:Building Surveyor:Challenges:

Not many graduates choosing to be BS each yearNot many new construction projects in Hong Kong

–Scope of work is narrow–Mainly deal with existing building such as building

maintenance, renovation, heritage conservation, UBW removal, etc

Competition within the local market and among other professionals render BS projects become less profitableProfessionals are facing more challenges and difficulties than before


Local Market – Land SurveyorLand Surveyor:Land Surveyor:

Difficult to switch between private and public sector since manypractitioners in private sector are not of professional grade

LSLSLS

PublicPublic

Land GrantLand GrantLand Grant Land Administration

Land Land AdministrationAdministrationLand

Allocation

Land Land AllocationAllocationLand

Boundary

Land Land BoundaryBoundary

PrivatePrivate

Construction Work

Construction Construction WorkWork Land

Boundary

Land Land BoundaryBoundary

MostMost

Public Sector: Salary level is generally higherJobs are more diversify

Private Sector: Jobs have been developed slowly Mostly related to construction work


Local Market – Land Surveyor

Land Surveyor:Land Surveyor:

Challenges: Not many graduates take APC exam each yearNew construction works are limited since the Asian Financial TurmoilLimited job opportunities from the Government over the last ten years while private sector are only dealing with construction workResources for LS in private sector are limited as many construction works are dominated by engineers or architectsLimited channels for local professionals to catch up with new technologies

Too little new construction

works??

Too little new Too little new construction construction

works??works??

No new openings from Government??No new openings No new openings

from Government??from Government??

Limited graduates??

Limited Limited graduates??graduates??

New Technologies??

New New Technologies??Technologies??


Local Market – Quantity Surveyor

QSQSQS

Dispute ResolutionDispute

ResolutionCost PlanningCost Planning

Institutional FirmsDevelopers / Investors




OVER 80%OVER 80%

Project Management

Project ManagementProcurementProcurement


Local Market – Quantity SurveyorQuantity Surveyor:Quantity Surveyor:

Mostly working in private sector (mostly consultancy firms, contractors and developers)Only very little government department is employing QS because many current government jobs are using contractors to do most ofthe procurement procedures Wide salary level range with average comparable to the public sector generally (depends on grading and experience)Longer working hours and wide scope of work when compare to public sectorDifficult to switch between private and public sector

Challenges: •Long working Hours and tough working environment Surveying graduates not choosing QS•Number of construction projects in HK is decreasing in the past ten years•Financial Tsunami causes suspension of construction projects


Local Market – Property and Facility Management Surveyor

Back to Flowchart

Asset Management

Asset Management

Facility Management

Facility Management

Property Management

Property Management

Shopping Centre Management

Shopping Centre Management

Property Management CompaniesDevelopers / Investors

Private SectorPrivate SectorQuasi-government Organization

Government OrganizationPublic SectorPublic Sector

MostlyMostlyMostly

More jobs to private sector due to “Outsourcing of projects causes shrinking of public sector”

PFMPFMPFM


Local Market – Property and Facility Management Surveyor

Property and Facility Management Surveyor:Property and Facility Management Surveyor:

Challenges:

Slow growth Not many development in HK??

Slow growthSlow growth Not many Not many development in HK??development in HK??

Cost cutting Limit the potential of expansion of

industry??

Cost cuttingCost cutting Limit the Limit the potential of expansion of potential of expansion of

industry??industry??

Low starting salaryunattractive to graduates

Low starting salaryLow starting salaryunattractive to unattractive to graduatesgraduates


Regional and Global Market

1. Rio Hotel2. Galaxy StarWorld3. Wynn Macau4. Grand Lisboa5. Crown Macau6. The Venetian7. MGM Grand Macau8. Ponte 169. Galaxy Cotai Mega Resort10. City of Dreams11. One Central Macau12. Oceanus13. Nam Van14. Luxury Residential at Taipa15. Macau Studio City16. Four Seasons

All of these were completed in the past few years

11

101099

88

77

66

55

443322

1616

1515

1414

1313

1212

1111

Macau’s blooming market for the past few years with lots of mega projects completed such as residential, retail, office, hotels, casinos etc


Regional and Global Market - General Practice Surveyor

China & China & Other CitiesOther Cities

NOWNOW

19701970’’ss

Hong Hong KongKong

Hong Hong KongKong

China & China & other citiesother cities

General Practice Surveyor:General Practice Surveyor:


Regional and Global Market – General Practice Surveyor

VietnamIndia

MalaysiaKorea

Middle EastEurope

US

MacauTaiwan

Others….

ChinaRegional and Global MarketRegional and Global MarketGeneral Practice Surveyor:General Practice Surveyor:

Unfamiliar with China market, i.e. cultural aspect, design aspect…etcUnfamiliar with China market, i.e. Unfamiliar with China market, i.e.

cultural aspect, design aspectcultural aspect, design aspect……etcetc

Different planning and property development policy in different province

Different planning and property Different planning and property development policy in different provincedevelopment policy in different province

IPO valuation

M & A

Market feasibilitystudy

Others


Regional and Global Market – Planning and Development Surveyor

Planning and Planning and Development Surveyor:Development Surveyor:Developers or investors in HK will have more projects in China bring more opportunities to P&D surveyorsPlanning and development is essential for every developmentBut there is just China Real Estate Appraiser in China who are responsible for valuation only, but not planning and developmentP&D surveyors from HK has an important role

More Developments in ChinaMore Opportunities


Regional and Global Market – Building Surveyor

Building Surveyor:Building Surveyor:Lower or similar salary level in other regions

Not much working opportunities in other regionsSurveyors in HK may not be familiar with the statutory requirements, laws, regulations and ordinances in other markets including Mainland as well as Southeast Asia

Opportunities?Opportunities? Wider Scope of WorksWider Scope of Works

Project ManagementProject Management

Building ServicesBuilding Services


Regional and Global Market – Land Surveyor

Land Surveyor:Land Surveyor:Due to legal issues, HK professionals are not permitted to handle geographical information of China and hence cannot practice in ChinaSalary level to work in other regions are not much higherthan in Hong Kong

South-east Asia Middle-east Asia

Others….

China X

Regional and Global MarketRegional and Global Market


Regional and Global Market – Quantity Surveyor

Quantity Surveyor:Quantity Surveyor:Other cities/countries (including PRC and America) starts to adopt the HK(British) procurement systemBlooming economies in the emerging market creates lots of construction projects, hence, job opportunitiesLack of professionals in the area of procurement in other regionsForeign companies request HK professional to be project management rolesDiversify scope of works and services

South-east Asia – Thai, Viet, Singapore…

Middle-east Asia – UAE (Dubai)

Others (EMEA, North America)….

China

Regional and Global MarketRegional and Global Market


Regional and Global Market – Property and Facility Management Surveyor

Property and Facility Management Surveyor:Property and Facility Management Surveyor:Financial crisis caused suspension of completion of projects, hence, no new management position in short termForeign markets developers would only employ HK professionals as management levels or senior levelsHong Kong professional have advantages because of having higher ethical standards

employ HK professionals as senior management levelsMuch development projects are to be completed in the future in PRC as well as other emerging markets

Opportunitiesand Our Future


Opportunities and Our Future

Rising ExpectationsRising ExpectationsRising Expectations

New Challenges New Challenges New Challenges

Demand from different sectorsDemand from Demand from

different sectorsdifferent sectors

Demand from wider geographical originsDemand from wider Demand from wider geographical originsgeographical origins

Needs for multilateral professional development

Needs for multilateral Needs for multilateral professional developmentprofessional development

Create Opportunities


Opportunities and Our Future – Local – General Practice Surveyor

General Practice Surveyor:General Practice Surveyor:Speed up of urban and rural renewalSpeed up of the public and infrastructure projects (e.g. new railway projects and regional highways as well as the development of HK-Zuhai-Macau Bridge)More mega projects such as large shopping mall To restrict the preparation and submission of planning applications to professionals onlyFuture trend: Service-oriented

Require contribution of professional young surveyors

• Better planning of development• Price setting• More advanced leasing and marketing

techniques and agency services• Facility management and asset

management

•• BBetter planning of developmentetter planning of development•• Price settingPrice setting•• More advanced leasing and marketing More advanced leasing and marketing

techniques and agency servicestechniques and agency services•• Facility management and asset Facility management and asset

managementmanagement


Opportunities and Our Future - LocalBuilding Surveyor:Building Surveyor:

Mandatory Building Inspection SchemeClassification of Building StateAllocation of more resources to building maintenance, construction and infrastructures by Government

creates more job opportunities during the financial turmoil Public involves more in building maintenance works awareness of the importance of BS has been increased

Quantity Surveyor:Quantity Surveyor:Insufficient supply of QSGovernment creates more job opportunities during the financial turmoil by increasing its expenditure in building maintenance, construction and infrastructure more resourcesDiversification of scope of work including project management, contract management, dispute resolution, etc


Opportunities and Our Future - Local

Property and Facility Management Surveyor:Property and Facility Management Surveyor:Stable growth in long term (size of the industry depends on number of existing units)Intrusion of Green Management conceptSeek more mutual recognition in the industrySeek for eligible recognition as Registered Professional Housing Manager (RPHM)Extend business to Mainland industry

Land Surveyor:Land Surveyor:New technologies create new job opportunities and widen scope of worksInsufficient professional grade LS in long termGeographical Information System and 3D Laser Scan ModellingNew job opportunities created by the government

NEWTECHNOLOGIES

NEWNEWTECHNOLOGIESTECHNOLOGIES


Opportunities and Our Future - RegionalRegional:Regional:General Practice Surveyor:General Practice Surveyor:

Living standard of China is improving demand in property marketDevelopers or investors in HK will have more projects in Chinabring more opportunities to HK surveyorsHK surveyors have wider vision and can solve the problem with flexibilityMore innovative

Planning and Development Surveyor:Planning and Development Surveyor:Planning and development in China is not comprehensive, but it is essential for every development bring more opportunities to HK surveyorsLots of HK developer would like to enter into China market whichcreate lots of opportunities to HK surveyors


Opportunities and Our Future - Regional

Building Surveyor:Building Surveyor:Conduct due diligenceMore construction project in Mainland more wider range of worksDiversify scope of works and services

Quantity Surveyor:Quantity Surveyor:Other cities/countries (including PRC and America) starts to adopt the HK(British) procurement systemBlooming economies in the emerging market creates lots of construction projects, hence, job opportunitiesLack of professionals in the area of procurementForeign companies request HK professional to be project management rolesDiversify scope of works and services


Conclusion & Suggestion

SpecificationSpecification DiversificationDiversification+

Continuous Learning and Sustainable DevelopmentLife-Learning / Advancement of Professionalism

Professional Diversification / SpecificationCreativityLanguagesExport of Professionalism

Thank youThank youAcknowledgementAcknowledgementThe Hong Kong Institute of SurveyorsThe Hong Kong Institute of SurveyorsThe Hong Kong Polytechnic University The Hong Kong Polytechnic University Prof. Barnabas ChungProf. Barnabas ChungMr. Edwin Tsang (P&D), Chairman of PDD, HKIS Mr. Edwin Tsang (P&D), Chairman of PDD, HKIS Mr. Gary Yeung (PFM), ViceMr. Gary Yeung (PFM), Vice--chairman of HKIS chairman of HKIS Mr. James Law (BS), Head of Building Consultancy Services (CBRE)Mr. James Law (BS), Head of Building Consultancy Services (CBRE)Mr. Lesly Lam (LS), Honorary Treasurer of HKIS Mr. Lesly Lam (LS), Honorary Treasurer of HKIS Mr. K. W. Leung (GP), Director of Valuation (CBRE) Mr. K. W. Leung (GP), Director of Valuation (CBRE) Mr. Stephen Lai (QS), Managing Director of RLBMr. Stephen Lai (QS), Managing Director of RLB


Q & AQ & A


chart

1. Real Estate Development Process

2. Local vs Regional vsGlobal

3. Opportunities and Challenges

4. Our Future

Documents

The Way I see the Building & Real Estate Industry - A ... · Public sector: Government and quasi-government organizations Higher demand of services by the publicÆincrease the daily