NEW YORK (Reuters) - Global real estate agencies can stay independent, even though competition from investment banks is growing as commercial property evolves into a core investment product, the head of Jones Lang LaSalle (JLL.N: Quote, Profile, Research, Stock Buzz) said on Monday.
"Yes, we do increasingly see them as competitors, especially in larger transactions. But their approach is less based on real estate fundamentals so I think we will still be independent in 5 years' time," Colin Dyer, chief executive and president of Jones Lang LaSalle said at the Reuters Real Estate Summit in New York.
With an estimated $15 trillion in global real estate in corporate hands and only $5 trillion of real estate in investor hands, there was plenty of scope for turning more physical stock into an investible commodity.
But turning non-investment grade property into investment grade property was specialist, pain-staking work and probably beyond the ambit of investment banks, he said.
"At that point the market has to produce a return by adding value or through professional management," Dyer said.
Major banks with billion-dollar quarterly earnings, rather than the tens of millions earned by even the biggest global property agencies, have growing real estate businesses as they seek to broaden their earnings streams by developing alternative asset classes.
Among those jostling for position in an increasingly crowded global real estate investment market are Morgan Stanley MWD.N, Deutsche Bank (DBKGn.DE: Quote, Profile, Research, Stock Buzz), Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz), Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), Citigroup (C.N: Quote, Profile, Research, Stock Buzz), and UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz).
Their interests stretch from specialist financial markets such as property derivatives and mortgage-backed securities to areas that have seen increased agency involvement, such as fund management and even broking or buying up property on their account.
Dyer said Jones Lang LaSalle's income was derived from 4 core areas, with 20 percent coming from broking services, just over a quarter from its corporate business including real estate outsourcing, 15 percent from investment management, and the rest from traditional agency work such as leasings and valuations.
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