Ben Duncan, President of CBRE North Asia, shares his experience and strategies
to adapt to Korea's real estate market.
Ben Duncan is the President of CBRE’s North Asia business, responsible for 27 offices in China, Hong Kong, Taiwan, South Korea and Japan. He works directly with CBRE’s in-market leadership across these geographies on enhancing its client offering and delivering world-class real estate solutions.
He has 25 years of real estate experience, 22 of those in Asia Pacific. He has worked in three of the world’s leading financial markets—London, Hong Kong and Tokyo—and has advised clients on projects in 14 countries.
With oversight for Korea, Duncan sees broad opportunities in the world’s 11th largest economy. Particularly as client demands continue to diversify and demands for office, retail, logistics and industrial solutions evolve, the scope for CBRE’s business in Korea continues to grow, as does collaboration between global and regional teams with the firm’s on-the-ground talent, to provide clients in Korea with the most innovative real estate products and services. Korean investors have been actively looking for investment opportunities in real estate markets around the world such as mature markets in Europe, the United States and Asia. In addition, there is an increasing number of cases of asset managers setting up real estate investment funds targeting retail investors directly. This complements the fact that Korea is known for some of the largest pension funds in the world. Many of the funds are global players through either direct real estate investment or as a limited partner in investment funds, providing opportunities for firms like CBRE with global connectivity.
We sat down with Ben to discuss the unique qualities of the Korean real estate market and about how CBRE’s story fits into it.
Please tell us about CBRE and its history. What kinds of services does CBRE offer to its customers?
CBRE has been operating in Korea for 19 years since 1999 － next year is our 20th anniversary, which we’re very excited about.
We offer a range of services for our different client groups. The easiest way to think about them is that there are Owners who invest in Real Estate, and there are Occupiers who use it. We offer integrated services to both. That can involve advising on the sale of assets or on leases, as well as managing buildings or space. We also provide valuations and consulting services, research and technological solutions for clients in the commercial real estate sector. While our main focus is the office market, the retail and industrial property markets are also very important parts of our business.
What made CBRE establish a branch here in Korea? What are the advantages of doing business here?
After the Asian Financial Crisis in 1997, the real estate investment market opened up and the clients that CBRE was serving in other parts of the world were keen to establish a presence in Korea.
20 years on, our desire to increase our penetration into Korea remains as strong as ever. Specifically, we see unlimited potential to serving more Korean corporations and investors as their influence continues to grow on the global stage. To execute this strategy effectively means adopting global best practices and services where they make sense, yet having the confidence to adjust our approach where a more organic solution might yield a better outcome.
The main advantage to doing business in Korea is our people; they’re hard-working, well-educated and dedicated. Korea is also less understood than other large markets in Asia, like China, Japan or more western markets like Hong Kong and Singapore. This means that we can add real value to our clients by helping them navigate their way through some of the unique aspects of the Korean business environment.
The real estate market in Korea is pretty unique. How is it different from other parts of the world?
Our businesses across North Asia are diverse. They are also at varying stages of development. It’s a unique geography where a common approach doesn’t always work. Korea is one of these markets where we have been very conscious of adapting a global model to meet local demands, customs and client-bases.
The chaebols in Korea present a unique proposition. Chaebol ownership and their involvement in service-provision reduces the propensity of many companies to outsource. That creates an opportunity, though, because as the market matures, and as chaebols become more global, even though they’re already very global, they’re going to want to deploy capital that’s tied up in real estate for their global expansion endeavors.
Also, in Korea there are relatively fewer western-style malls, although that has changed recently. Now we see big malls like the IFC and Starfield malls, but considering the population here, it’s a small number, which is strange, because the retail market potential is huge.
What were some marketing strategies that CBRE carried out to target Korean customers?
CBRE is not yet an established household name in Korea. So we need to continue to build our brand and credibility. One way we do this is by emphasizing our scale (globally and locally) and the fact that we can leverage our best global practices for the benefit of our local clients. We also provide integrated services that deliver outcomes for clients that most of our competitors struggle to replicate. We frequently reference our track record to demonstrate our experience and capability. While we’re a large global company, we are acutely aware of the local market dynamics and we always make sure to make adjustments as necessary to reflect local-market nuances.
Were there any challenges your company faced while doing business in Korea?
Breaking down internal barriers and silos to change our mindset is an ongoing challenge, in Korea and across the North Asia region. A culture of collaboration is core to tackling these issues. As Korea becomes more globally integrated, there are unlimited opportunities for our on-the-ground teams to collaborate with their colleagues across North Asia and globally. It’s a win-win situation for our people and clients.
Korea is a competitive market and we’ve faced new competition from local companies that didn’t previously exist in recent years. As a result, retaining top talent is an everyday challenge we face in maturing markets like Korea.
The starting point is our concept of Employee Advantage. We need to clearly communicate our culture and values, so we can capture the essence of what it’s like to work at CBRE, building on the principle that each of us is empowered to take responsibility for our own careers. That way we can attract the right type of person from the outset and reduce our attrition levels. By 2020, more than half of the workforce will be millennials. We need to understand this group better. They say that they’re looking for job satisfaction and fulfilment!
How can Korea become a more ideal business environment for foreign companies like CBRE?
I think Korea already has a mature regulatory environment which makes doing business here fairly predictable. I guess one thing I would personally like to see is more progress in terms of breaking down the hierarchical structures in society － while this is a relevant part of Korea’s unique culture, I feel that the rigid hierarchy can stymie openness, creativity and transparency. It’s also sometimes inconsistent with performance-based recognition, and can occasionally lead to unintended consequences. I think the newer generation is open to evolution in this area, and I think it’s great to see that the current president is making efforts to be more accessible, which is hopefully a setting a positive example to other institutions in the Korean society.
What Korean companies are you currently working with to strengthen your business partnerships?
We work with a range of companies, including large conglomerates, asset management companies and institutional investors such as pension funds, insurers and securities companies. We do a range of work, including helping Korean companies evaluate incentives between various jurisdictions overseas before making investment decisions, connecting outbound Korean capital with properties available for sale in gateway locations in Europe, the U.S., and within APAC, and providing leasing and property management services for commercial real estate assets on behalf of asset management companies in Korea.
What are some future plans that CBRE has when it comes to doing business in Korea and in Asia?
CBRE is a growth business and we are focused on growing our business here, within Asia and across the globe. We recognize that we live in a world of fast-paced change, and that technology is changing the way we work and play, so providing technology-based solutions for our clients will be one way in which we will achieve growth. We recognize that even though we are currently the largest company in our sector, we cannot become arrogant or complacent, and we must continually improve and innovate in order to maintain our market position. We also need to make sure we don’t underestimate our competitors or undervalue our clients.
What is CBRE doing to rise above the competition in the Korean real estate industry?
At the start of last year, we set in place a vision to become the undisputed leader in commercial real estate services in Korea by embracing a performance driven culture. We have seven strategic priorities around growth, clients, collaboration and communication, retention and recruitment, platform, continuous improvement and leadership to help us achieve this vision. We are very focused on becoming an employer of choice, providing measurably superior client outcomes, creating greater linages within our business and between ourselves and our overseas colleagues, investing in our platform and having an engaged, proactive and inclusive leadership team.
By Grace Park (firstname.lastname@example.org)
English Editor / Invest Korea