Real estate globalization gets boost from technology

By Kenneth V. Smith

It's more than just a blip on the trend line charts. Several recent major indicators point to the rapid globalization of real estate brokerages. Europe and Latin America are taking steps toward American style selling of single family real estate, while U.S. commercial real estate is gaining British and Australian influence.

The Internet and other communication technologies are always cited in the announcements of mergers of commercial brokerages and international expansion of residential franchises. The rapidly increasing global availability of information is changing the way business is conducted. Brokers throughout the world are developing strategies and alliances to harness online tools as they try to stay ahead of their competitors.

H. E. Naumann, managing director of Aufina GmbH, a real estate brokerage with headquarters in Wiesbaden, Germany, signed an agreement last month with ERA Realty, a Cendant company based in New Jersey. In an interview with the German financial newspaper Handelsblatt, Naumann said the business of selling single family houses and flats has become far more difficult in recent years and he needed to offer a wider range of services within Germany and internationally.

ERA has 2,500 franchisees in 18 countries, but Naumann is the first in Germany to affiliate with ERA. The company's motto is "Where Technology Finds A Home."

Naumann told Handelsblatt the chief reason he affiliated with ERA Realty was the franchise's communications technology and network software used to buy and sell homes. He will decide in the next few months how much of ERA's practices will be adopted for his German offices, but he already knows some marketing techniques will not work. For example, ERA Realty brokers in the U.S. guarantee that a property will be sold within an agreed upon period of time, or ERA will buy the property. Naumann said such a guarantee in Germany is unthinkable.

Coldwell Banker, another Cendant company, last month announced it had sold a master franchise agreement for all of Mexico to Richard Smith, who owns 24 Coldwell Banker offices in Texas. Coldwell Banker has had offices in Puerto Rico since 1990, but the move into Mexico marks its first major expansion into a Spanish speaking country.

"We fully expect our master franchisee to capitalize on the comprehensive systems and technology behind the Coldwell Banker name to ensure success and the beginning of the way real estate is bought and sold in Mexico," said Darlene Aut, the company's vice president for international franchise sales.

Coldwell Banker specializes in the sale of luxury homes through its Previews program and vacation homes through its Resort Property Network. Both of these specialties are featured on Coldwell Banker's extensive Web site.

Cendant, which also has the CENTURY 21 banner in addition to Coldwell Banker and ERA Realty, is not alone spreading American style residential real estate sales techniques to other countries. RE/MAX Europe is on a fast pace of opening new offices in all European countries.

This week in the commercial real estate arena, CB Commercial, one of the largest US commercial real estate brokerages, and Richard Ellis International, a leading British property services firm, joined forces to form the world's largest real estate service companies. The new company, to be called CB Richard Ellis, has 8,000 employees in more than 200 offices in 29 countries. Both companies have sophisticated databases and communication technology.

CB Commercial brings to the partnership 147 offices in the US, Canada and Mexico. With extensive coverage in Europe, Africa, South America and the Asia-Pacific region, Richard Ellis is recognized as a leading international propertyconsulting firm. The combined CB Richard Ellis will advertise services through company-owned offices in virtually every major business center in the world.

"Whether it's in the U.S. or around the world, we are where our clients want us to be," said Jim Didion, CB Commercial's chairman and chief executive officer, who retains those posts at the new CB Richard Ellis. "We're excited to have created the first commonly owned, commonly managed global real estate services firm."

"Institutional investment generally, and real estate investment specifically, is increasingly viewed in a global context,'' said Barry White, the Richard Ellis chief executive who is now chairman of CB Richard Ellis Global Operations Management Board. "CB Richard Ellis is able to service cross-border real estate investors with on-the-ground experience and a global service capability that are unequaled in the industry. Further, our local market knowledge worldwide is the basis of a wealth of research and information that is critical to sound real estate decision-making in today's marketplace."

Major global competitors of CB Richard Ellis are the Knight Frank Group and Jones Lang Wooton. Knight Frank is a power in British commercial real estate and has extensive activity in Europe. Jones Lang Wooton is well known in Europe, Asia, Australia and New Zealand, but the company has only 10 offices and 300 employees in the U.S. JLW Chairman J. Michael Dow has announced a goal of doubling his company's portfolio by 2000.

Jones Lang Wooton is in the midst of a restructuring as part of a move to raise capital or to merge with a major U.S. commercial property group. JLW's international board, chaired by Australian Mike Smith, met in Barcelona last month to further integrate its branches to form a fully networked global real estate group.