The Leader - September/October 2008 - (Page 44) real e stat e maNaGemeNt You Think They’re Hot, But They’re Not: Top-10 Overrated Investment Destinations BY DeNNIs meseroll, DeNNIs DoNovaN, jaY BIGGINs, keNDall turNer, aND aNDreW tulloch I t’s easier to take advantage of an opportunity you know about than one you don’t. So how do you know what – or, perhaps more importantly, where – your best opportunities are? Today’s global game of Monopoly not only requires that companies looking to invest abroad be familiar with currently promising locations; it also demands that they anticipate what locations will be ideal investment destinations tomorrow. In this article, we will identify the current global hotspots for foreign direct investment in the services and manufacturing industries, and then show why firms should consider their options carefully before committing to an investment in any one of them. methoDoloGY In order to determine which cities are most investment-saturated – and therefore most likely to be plagued by rising costs, labor shortages and high turnover – we have analyzed direct investment statistics for select services and manufacturing industry sectors from over 200 cities worldwide. The services industry, typified by information technology (IT), knowledge process outsourcing (KPO) and business process outsourcing (BPO), is very labor-intensive. As such, we have taken the number of new jobs created as the primary indicator of market saturation. Since manufacturing is less labor-intensive, and the cost of manufacturing investments can range widely according to the type of manufacturing in question, the number of new projects serves as the primary indicator of market saturation. However, we also took total committed investment into account as an additional indicator in each case (as the total value of investment pouring into one locale results in resource constraints and, consequently, rising costs). The data we analyzed was obtained from OCOmonitor, which monitors FDI on a city-level worldwide. OCOmonitor classifies FDI data according to business function (i.e. business services, HQ, and testing) as well as industry (i.e. financial services, chemicals, and biotechnology). Given this classification system, we used investment in customer support centers, shared service centers or technical support centers as proxies for overall investment in the IT/KPO/ BPO sector and investment in automotive components, automotive original equipment manufacturing (OEM), consumer electronics and industrial machinery, equipment and tools as 2 0 0 8 th e le aDe r 44 septemBer / octoBer
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