Could you summarise the history of the company in Venezuela?
I think it's one of the oldest in the world related with the provision of real-estate services. The first one, Richard Ellis, was founded in 1773. Richard Ellis was based in UK. They then started to open offices in the rest of Europe jumping to South America: they opened in 1979 in Brazil, followed some years later by Argentina. So they were spreading more or less in Europe and South America. In the mean time, CB Commercial was one of the biggest companies in the U.S. It was based in California, founded in 1906. The two were consolidated and traditional companies and eventually joined their efforts in 1998, known from that moment as CB Richard Ellis. In the UK we are known as CB Hillier Parker, it is the only place where we do not have the same name- Throughout, in the rest of the world we have Two Hundred and Fifty Two offices, it is the biggest company of its kind and the only one that is vertically integrated, which means that we are all part of the same structure, with the same procedures and guidelines. It is not a franchise. From my point of view the franchise covers you and provides you with certain guidelines, but it does not mean you are the same company world wide, you continue being what you were before, when you get a franchise, you have some new guidelines and maybe a different way to dress, to identify yourself but you keep being more or less the same company. In the case of Venezuela, when we decided to open the office here, it was 1999. CB Richard Ellis usually arrives in a country and creates from the very beginning, from zero, the office or they identify the best company in the city and they purchase it, like it was done in Santiago (Chile), to make them part of the rest. In the case of Venezuela, we opened from zero, we started looking for the best professionals we could find here and we hired them. It was founded in June of 1999.
It was a very difficult time because the presidential election had taken place only six months before and a lot of changes were coming, but we felt it was the best moment to open, to create and establish our company here, to start working, to start providing the best quality services in the market. Of course the market was on stand by, because everybody wanted to do things but everybody was trying to find out exactly what the scene was. There were a lot of things changing here with the new president, he was talking of a new Venezuela and nobody knew exactly what was the meaning of that new Venezuela, and which opportunities were going to be included.
First we started working with corporate clients, we have a lot of clients worldwide to whom we have to provide with our services. I think that is one of the reasons we opened here, because some of those international clients, who were already established here and had needs of real estate services, kept asking us why we were not here. So we started helping that kind of client, because they already knew who we were, and in the mean time we worked very aggressively with an advertisement campaign in the multinational magazines, as most of our clients and our target clients are multinational corporations. We also worked with local corporations but mainly for the people that have heard about us, and they have an idea of what we can provide them with. We started to work on a very aggressive campaign and its results were great. The best way to be known is through a good performance, every time that you accomplished a client's need, they usually show their satisfaction referring other clients to you, and that becomes in a chain. For example the president of one of the companies we helped called me and told me that he had given our number and name to the president of some other company because they needed us to help them. In this way we started to spread our services to most of the corporate clients, which are the kind of clients we work well with.
It is 2001 now, how much have you grown, or how much have you expanded?
Mainly in these two years you can resume the activity of the market in two areas Office and Industrial. First of all regarding the office market, most companies have been restructuring their local operations, looking to minimize their operation costs, which has caused the reduction of their staff and, consequently, a diminution of their office space needs and they have been taking advantage of the market in terms of better locations and rents available, so that was mainly the movement last year and made us hire more people in our Brokerage Department, people that were moving out from large offices into smaller ones but in better locations and lease conditions. On the other hand, a lot of companies have also been looking for turning their real estate portfolio in a more effective one, trying to sell properties that they do not use or they do not need, mainly in the industrial sector. That is why we began to work with a lot of different companies, for example the strategy of one of our clients is to concentrate their distribution on four main cities, and they used to own properties in every single city of the country, so we are selling those properties that are not going to be used. That is why we have had to start looking for strategic associations in some of the states in order to expand our coverage, for example in Carabobo and Aragua where a lot of industrial activity is established, we have been talking with a very serious and traditional company there, to make them our associates.
Will you eventually look towards possibly of buying them out?
Not yet, we want to see how we can work together. We want to see their performance because they have to support us there. They will receive our guidelines and constantly backup and they have to be able to provide the same kind of services we have here in terms of quality. I think that if you are good, and you know your market you can provide the client with what they expect to receive from you. We are going to be over there anyway all the time.
What kind of cities if I could guess, could it be Barcelona, Maracaibo, Valencia?
Yes, mainly we will start with Valencia and our associates will going to take care of the whole state Carabobo, including Puerto Cabello where we have a lot of properties and where we believe the growth will be significant and quickly, as there is in Aragua. The other state in which we really want to grow very fast and we are also founding a strategic alliance with one of the best professionals is the state of Lara. Particularly Barquisimeto, because it is very special and well organized city, with a very versatile market. We believe that Puerto La Cruz, will be the third one, but we are doing this step by step in order to do everything in the best way. We have grown a lot, we are moving to another office because we can no longer stay here. Part of our staff, especially from the Management Services Department is coming once in a while for the meetings here, but they are mainly in their respective buildings.
I would like to talk a little about the services, from the day one you begin with a client until the deal is closed. How complete is the service that you provide, we know you do a lot of stuff that most agencies do not.
Absolutely, that is why we are different. We are the number one real estate consultants in the world.
Are you number one in Venezuela?
Not yet, but we will be.
Who is ahead of you right now?
I cannot really say that someone is ahead of us. I think we have a share of the market. We have a lot of competitors, and they are good. But I do not think they can say that they are above or beneath us. I think that each one of us has part of the market and we are taking the part that we are really interested in. For example, we do not want to work in the residential sector- we do not do that here. I think that there are a lot of companies that can take care of residential needs; I believe that such market is already well established. Our services are focus in the corporate real estate and that is why we want to consolidate these kind of service. The difference between CB Richard Ellis and the rest is that we provide a complete professional service, that is our main concern with our clients. From the very beginning we study their needs, if they need to purchase, if they need to sell, if they need to rent. We analyse with them the availabilities, possibilities in the market, the best choices they have, if they need an appraisal we do it, we do the evaluation and present them all possible solutions, they do not have to move because we move for them. We give them what they need to receive, what they need for taking the best decision. We not only help them to look for the properties, if that is the case or selling the properties, but also to negotiate, which is the most difficult issue, to negotiate the best way for everybody. Once the negotiation have successfully conclude, we are able to take care of the rest, because if they are going to move we have the Management Services department where we can provide them with the project management, covering from the design and construction bidding process until the movement, after that, we can also offer them the facilities management, which allow them to concentrate their efforts in what is their core business while we take care of their real estate asset.
It is a full package of services. It is a very particular thing, because a lot of companies can provide you with the price, or they can look for a place or a property that you need, they can rent the property or purchase the property for you and that is it, they stop there. Then, if a multinational is planning to start operations here and they do not know the country, they will need a company with the local real estate know-how and we can offer it to the client, from an objective point of view. We know perfectly who we are going to invite to the bidding process, knowing that they are going to be serious companies. We have some preference providers because we have been trying them already with tasks that they have been doing for us and they are great, not only with the best prices but with the best quality and their level of responsibility. For example, if you negotiate a place for a client and you have a grace period, it is very important to be on time. We take care of this; we give you the whole service, a one-stop shop. I think that is the most important thing, because if you are new in town or even if you are not, you can take care of core business while we are taking care of what we know. We are going to be the only provider you have to talk with, in the mean time we are going to be dealing with the suppliers, constructors, engineers, architects and so on, we are going to be handling everybody while you are taking care of what you have to. I think that everyone has to focus on what they know; it is the best way to be effective.
Can you give us an outline of your portfolio in this market?
I think it is important to give you an idea of the four departments that we have here. The first one, one of the most important departments in every real estate agency, is the brokerage department, where we take care of the purchase, selling, leasing, property research, and relocations. That is the main department and we have a lot of brokers here and I think they are all number one.
| The other department that is also one of the most important departments because it is the one we want to make stronger, is the management services department, because that is the difference between the rest and us. The management services department can provide you with property management, which is to take care of the operation of the building that you own, usually lease by third parties. We can take care not only of the operation of the building, but we can also take care of the administration of their rents, and all those sort of things related with the operation and administration of the building. One of the best things that has this service is that we guarantee the owner that we will look for opportunities to make the operation cost go down with the same level of quality and performance because this will be our goal. That is one of the advantages we offer. We have, for example, one of the intelligent buildings in town and the owner is absolutely happy with us, which is the Centro Empresarial Sabana Grande. Other service, the facilities management, is provide to the user of a real estate property and is mainly the management of the building operation. This allow the user to concentrate in their core activities and they do not need to have inside their organizations a department to take care of the services and operations, they just have an outsourcing to take care of that: us. I think that in Venezuela, there is a very big opportunity here to consolidate these kind of services because nobody else has provided it yet. Very soon they will come but we will be ahead. Now we are going to begin with the Canadian Embassy, currently under construction and it is going to be ready really soon, it is in front of the Plaza Altamira. Other service that we offer in this department is the project management. The project management takes care of the whole process in the remodelling or development of an office or even an industrial or commercial property for the client. They just hire us and we take care of the bidding process in the search for the best providers and we follow the process for the client until the end . I think that will be one of our best departments very soon, we are joining to another company, or better said, we are working on a strategic alliance with a company which we think it will be ready for June this year. It is one of the best in the engineering field here in Venezuela, its name is PGP Ingenieros, they built the Centro San Ignacio that is one of the best office and commercial complex in Caracas. It is an engineering firm, that has a lot of experience. On one side we want them as preferred providers, if we have to prepare a bidding process we will always invite them for the construction part, but also we are improving with them the management service in terms of facilities and property management, because they know perfectly how things work here. They have a lot of knowledge that is useful to back up our experience Worldwide, where we handle 60 million square meters. Centro Empresarial Sabana Grande has around 35 thousand square meters and is huge, so you can imagine, 60 million square meters is a lot. But of course in every country things work in different ways, that is why we need the local support in order to join it with our global quality service and we will have the best service locally.
Is the vision very much long term?
Yes I think so. A management service is a department that usually has not the same level of revenues than for example a Brokerage department. You sell a property at 20 million dollars and you have 5% of commission, you get a lot of money. In management service it is absolutely different, because the fees are low, but we can provide services to a lot of buildings, so we are able to cover our expenses generating also profit, we can provide services to corporate clients and we will have access to the information of those buildings, which can be capitalized through our other departments developing potential deals profitable for our clients and for us.
We also have the evaluation and consultants department, where we carry out appraisals and consultant in terms of development, zoning, market and tenant mix studies and related activities. The last but not least is the market research department. We start from the very beginning developing our own database, because we can not trust other resources that could have another point of view to recollect data. We began with the triple A office market, producing quarterly reports. By the end of this year we will be also covering the commercial field and for the next year we will include also the industrial market. Our reports are received by our clients via Internet without any cost and that provides them with another view about what is happening with the market, if the rents are going up or down, if the prices are moving or if they are stable in order to make them also think about their decisions. Of course as their consultant in real estate we are always taking care in advance of their current and potential real estate requirements. We provide our client with opportunities in the real estate market, because we know it deeply.
Sometimes, in the beginning, the clients think they do not need all that, but at the end you create the need because you provide them with the best accessories and after that they are calling you every single day. That is why, for example when we started with Cargill, one of our best clients, we were given part of their portfolio and not all because another firm was in charge of the rest, now we have it all.
Talking a little about your portfolio and your clients, 3M for example, I imagine 3m is a part of the global network!?
With 3M, I think we have a certain level of corporate relationship, but mainly we took care of their need here in terms of office relocation, we rent a wonderful property for them. There is also Panamco, Fondo de Valores Inmobiliarios which is one of the biggest real estate fund in Venezuela, they own approximately 40% of the best offices properties in town. They developed their own commercialisation process but we have been assisting them renting their spaces and also making their appraisals. We have the Canadian Embassy to whom we provide with brokerage and management services, Bank Of America, Banco Provincial, CANTV, Cargill Venezuela, Avaya, among others. These are some of the biggest in terms of companies.
One of our more anecdotic operations, was the one performed for a multinational telecommunication company. We had to look for land in La Guaira where they will receive the first ring of optic fibber cable that would arrive in La Guaira. We started to do that in June 1999, we were looking for all the different choices and alternatives in order to analyse them. Then, we were ready to purchase one and suddenly the tragedy of La Guaira took place and one of the plots that was one of our best choices disappear, literally. So we had to start again with the search because the entire geography of Vargas changed. We found one and started the negotiations and then the governors decided to expropriate the property. We thought it was impossible to accomplish this deal, after 9 months working. But finally when the government found out that it would be better to leave the properties for those purposes because it would create employments and it would put Venezuela on the map, with the entrance of the telecommunication cable, they change their expropriation intention and finally we closed the deal 3 months later. So it was something amazing.
I think one thing the people must know about Venezuela is that we have a lot of opportunities in terms of the industrial park we have. Because we not only have availability, but also most of the municipalities as far as we know are creating incentives to make companies establish their industries in their jurisdictions. We have a lot of opportunities to develop, a lot of different kind of industries here in Venezuela. Not only because we have the properties in terms of real estate but also because we are the gate of Latin America. The location of our country is privileged for exporting and importing goods from and to the rest of our continent.
How long have you been in the market personally?
I have about 15 years.
And you started in residential sales?
No not really. First of all I started doing appraisals. I opened my own company, that was one of the 12 eligible companies of the Fondos de Inversiones de Venezuela. I got my degree in the Universidad Simon Bolivar, as an urban planner and after that, I specialized in appraisals, because the way in which I could approach the appraisals is different having the view of an urban planner that can handle the economic part, the demography, design, everything together but also the value. Each one of those parameters had incidence in the value so if you handle all that you can make a good appraisal and I think I have done more than 5000 to 6000 appraisals in my life. But in 1995 in the beginning of the year I woke up and said I would not do another appraisal in my life. You travel a lot and you meet a lot of different properties and people, but the main methodology and calculations are always more or less the same, so at the end it is the same kind of job, and if you have been working on that for too long you get a bit tire of it. You feel like you are not open enough to receive new knowledge because methodologies are always the same. Then, I joined one company as a manager of real estate for three years and after that I came to CB Richard Ellis once they called me. They told me that they wanted me to open the office here. It has always been my intention to provide these kinds of real estate professional services. When you are evaluating real estate properties you are all the time in the market because you have to know how the market is moving, otherwise you value something absolutely theoretical, due to that I have been always related to the real estate field.
What would you like to achieve in the Venezuelan market with CB Richard Ellis, what are your personal goals? How would you like to see the company in five years?
In less than five years I want us to be the number one in town. With the kind of services that we want to provide and the way we have been achieving success, I think it will be possible for us to do it. Mainly who is going to determine that are our clients and I think most of them are very happy with our performance.
Finally our readers are your potential clients, our report will have a full effect on this country and the global market as far as what the international community see what the reality is in opportunities, potentially, the people that hopefully will be contacting you , what would you like to tell them about CB Richard Ellis in Venezuela?
That we can handle a lot of good opportunities for them in the real estate market. We not only have excellent properties for sell or for rent, but we can also find the kind of property and/or real estate investment they are looking for. There are a lot of investment options here that are very interesting, business that can be very profitable for any investors like property acquisition with someone running the rent. I think that the investor should come down to perceive this kind of opportunities, that can guarantee levels of rent that are very attractive. With our scope of services we are more than ready to welcome and help them to accomplish the best real estate deals possible. |
