At Peter Lee Associates we have been conducting research programs for almost 30 years. Over that period we have witnessed first hand the impact of internationalisation on those sectors where we have a focus — in particular, Investment Banking and Institutional Stockbroking. As a result the local industry has undergone significant change and restructure, not the least in terms of the ownership of many of the previously independent partnerships — as with the UK, once revered names disappeared only to be sucked into the vortex of global behemoths.
From a client perspective the arrival of the international houses was met with much enthusiasm — access to global research, firms willing to take greater risk, the sleepy ways of old being replaced by much more dynamic firms and people — and seen as a win for the investor no matter how you looked at it.
But fast forward to 2007 and the GFC. Global powerhouses suddenly looked less compelling as they were forced to cut headcount significantly; the appetite for risk diminished in line with the strength of their balance sheets and the need to adhere to new regulations; Australia became an afterthought as a focus on larger, more profitable markets became an imperative.
So the desire of clients to be exposed to global forces ended up as a “be careful what you wish for” moment. And now, as we have previously written, the level of service provided to clients is not regarded as favourably as in previous times.
In 2014 Peter Lee Associates commenced a program covering the wholesale Real Estate Services industry — we recently completed our third iteration. This year, when choosing a real estate firm, “access to clients” is seen as one of the top three drivers behind that decision. Our feedback indicates that 70% of those executives running property portfolios view a real estate firm’s global footprint (i.e. having a global parent) as being important to their relationship.
Clients now are clearly looking to their real estate providers to have the capacity to access both capital and customers from international locations. The question that arises is whether this connectivity cannot be initiated — and managed — from an Australian domicile. After all, wasn’t that the way it was successfully handled when technology was limited to a phone and telex machine? And if that is the only benefit gained from a merger with an international firm…!
As they say in bull markets whilst the music is beginning to slow down — “it’s different this time.” It might well be but, as participants in one sector of the economy discovered almost 10 years ago, the embracing of international firms — and then relying on them to change the landscape for the better — does not always produce the outcome that you anticipated.