Abdul Jalil Omar Mohd Lizam Mohd Diah Azlina Md Yassin

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Presentation transcript:

Abdul Jalil Omar Mohd Lizam Mohd Diah Azlina Md Yassin Exploring Financial Performance for Corporate Real Estate Management in Malaysia Abdul Jalil Omar Mohd Lizam Mohd Diah Azlina Md Yassin International Conference on Technology Management, Business and Entrepreneurship (ICTMBE) 2015, Melaka

Presentation outlines Introduction to CREM Background of research CREM CREM setbacks Internal service branding – CREM Building CREM brand The methodology Findings Conclusion

Introduction to CREM Corporate real estate is the land and building owned by companies not primarily in the real estate business. Second highest cost (20-30%) after staff cost Matching real estate needs to business needs is an obvious requirement in the profit potential of every business. Corporate real estate (CRE) is an important but under-recognised organisational resource. The management of corporate real estate (CREM) considered as an internal service for organisation. Significant contributions to organisation’s success or failure

CREM Contributions CREM’s Function Contributions Physical Provide and manage workspace Data storage and tools to manage physical objects Corporate site selection Provide conducive workplace design Financial Financial flexibility in changing environment Cost reduction Owning or leasing decision Human Boost employee satisfaction Shifting ‘cost reduction paradigm’ to ‘value added paradigm’ Capital Market Increase shareholder wealth Liquidise capital for uncertainty

Research problem Corporate real estate management (CREM) in Malaysia is still a new concept. CREM is relatively under-developed and under-estimated. Without the understanding of CREM financial contributions, corporations still have negative perception towards CREM as a cost-centred function only. Understanding CREM financial performance opens to greater engagement in a company-wide strategies and the Malaysian economy as a whole.

Methodology Objective Methods Instrument Potential Outcomes To explore CREM practice among the Malaysian corporations Quantitative Document analysis Top 100 companies in Main market at Bursa Malaysia Review of financial statement from annual report. Real estate contributions Real estate policy and governance

Methodology (cont.) Source of data: Financial statement extracted from Bursa Malaysia Data bought from Bursa Malaysia Knowledge centre Top 100 companies (here) Data analysis based on Wills (2008) Sector: Consumer products Industrial products Trading/ services

Data Analysis (wills, 2008) Property as percentage of total asset Return on property Property value per employee Property value increase or decrease Property as percentage of operating cost

Comparison between Sectors for Property as Percentage of Total Asset

Petronas, Kerteh, Terengganu

Comparison between Sectors for Return on Property

Comparison between Sectors for Property per Employee

Comparison between Sectors for Property Increase or Decrease

Comparison between Sectors for Property as Percentage of Operating Cost Ratio

Summary & Conclusion Findings indicated that CRE ratio increase steadily along with the company revenue. It is important for CREM to link its financial performance to business performance in communication to senior management. Lack of details in real estate assets and business accounting standard presents difficulties in justifying real estate performance.

Thank You