PROSPECTS for growth in the global economy weakened during the second quarter, abetted by the continuing debt problems in the eurozone.

According to IHS Global Insight, the global economy is now expected to expand 2.4 percent in 2012, with growth in advanced economies expected at an anemic 1.3 percent. Forecasts for emerging markets, though lowered, still project 5 percent growth.

With the global economy so interlinked, the somewhat gloomy scenario in the West is bound to have some effect on China. But how much?

Colin Dyer, president and chief executive officer of Jones Lang LaSalle, a global specialist in real estates, discussed his view of prospects during a recent visit to Shanghai.

Dyer was appointed president of Jones Lang LaSalle in 2004 and CEO in 2005, after a career spanning multiple business sectors. He was previously a client manager at McKinsey & Co for firms in banking, petrochemicals, retail and medical equipment. He has also served in executive positions with British companies Northern Foods and Courtaulds Textiles. In 2000, he was founding chief executive officer of WorldWide Retail Exchange, an Internet-based business-to-business platform. He holds a bachelor's degree in mechanical engineering from Imperial College in London and an MBA from INSEAD in France.



Q: How often have you been to China since you took over the top position in 2004 and what changes have you seen?

A: I come to China once or twice a year in recent years, but for the board of directors' meeting, we hold it in China every two years, and in the years between, the board of directors go to India because these are our fastest-growing markets. I like to see latest developments personally and how our business is growing, and to meet our clients to understand how they are thinking. (This time I am here for our board meeting in Shanghai.)

When I was in Beijing in 2010, things were still going very strongly. Now they are slightly more hesitant, slowing and lacking a little bit of business confidence perhaps. But on the other hand, the government has succeeded in calming inflation, home prices and in creating more affordable housing. In general, things are growing but growing less.

This visit, I'm very much impressed by the level of demand from both national and international investors for shopping centers and offices. Buying demand is very strong.



Q: We are seeing an increasingly cautious economic environment around the globe. How do you expect the situation to impact your business?

A: We anticipate continued caution amongst investors and corporate tenants for the rest time of the year, but for our business, we are still seeing good pipeline activity. Even in Europe, which has a difficult economy, we see good levels of growth and good deals flow. While our first-half investment sales volumes were 7 percent below the first half of 2011, we project year-end volumes for markets as a whole to exceed US$400 billion, broadly matching 2011 levels. We are moving ahead with confidence, but we have been careful.



Q: Compared to well-established US and European markets, what appeals to or discourages international investors in China?

A: International investors like to invest in Chinese real estate because they all understand China is a very solid, long-term growth market. There are, however, difficulties for international investors, including relatively low market transparency, high operating costs, a limited number of investment vehicles, difficulty in onshore financing as well as foreign currency controls.

Competition from Chinese investors is also very large because the latter are able to pay higher prices than Western investors under a low cost of capital. The majority of commercial real estate transactions in China are now done by Chinese investors - Chinese sellers and Chinese buyers.

It has already become a very solid domestic investment market with domestic players, and we expect that to continue. Chinese insurance companies, whose assets exceed US$1 trillion, are now allowed to enter the real estate investment market, though at the moment, they have been very cautious and moving slowly.



Q: Based on your latest second-quarter results, the Asia-Pacific region currently accounts for a little more than 20 percent of your global revenue. Do you anticipate a notable increase in that share over the next couple of years? In the medium term, how do you position the Asia-Pacific market? What particular role will China play?

A: Over the past five years, this region has consistently represented between 20 and 23 percent of total global revenue. The Asia-Pacific is expected to remain a region of economic growth in the medium term, which means opportunity for firms such as ours.

Proportionally, I would expect it to be the fastest-growing market. But the difference for us is that in US and Europe, we can easily acquire companies to merge into our business because they are quite mature markets. However, in Asia, that's not so much the case. There are fewer companies because the real estate service market here is younger. We can have only organic growth in Asia.

There is great potential for the real estate industry as China continues to develop its tier 1.5 and tier 2 cities, as wealth is created and as spending power increases demand for real estate from a residential and commercial perspective.

We believe that despite the crisis in the eurozone and the general economic slowdown, the opportunities in China are huge and will remain so in the medium term and beyond.



Q: What's your growth plan for China?

A: China is one of our largest and fastest-growing businesses in the Asia-Pacific. We've been here on the mainland since 1994, and we have a long term growth plan for China.

In the past two years, we have opened new corporate offices in Chongqing and Shenyang and are scheduled to open our 10th mainland office in Wuhan late this year. By 2015, we expect to have at least 15 full-service offices in the Chinese mainland.

We want to grow very rapidly, but we don't want to just put dots on the map. We track each of the cities we're in according to certain criteria, such as the population and per-capita GDP.



Q: If you had US$1 million in cash for real estate investment in China, what would you buy?

A: If I were prepared to live in the market for five to 10 years, I would choose good quality retail assets in secondary cities. The disposable income of China's middle class will grow rapidly, so retail prospects here will be very strong.