This is the main conclusion of a recent survey by Ernst & Young Real Estate, Hospitality and Construction Group, among chief finance and chief operations officers in 103 British companies with a significant European presence and, 51 international Dutch companies.

Against the background of the global slowdown over the last couple of years, triggering cost reduction programmes, the results of the survey are surprising. With the predominance of risk management on the corporate agenda, it is alarming to see that more than 50% of the respondents responsible for Operations have a ‘poor’ or ‘very poor’ knowledge of their real estate.

Although the survey confirmed the emergence of corporate real estate into the boardroom, responses by many CFOs also suggest that real estate is on the agenda for the wrong reasons. The main driver of real estate issues within corporations is an ad-hoc reaction to the adverse market conditions of previous years, rather than a well-balanced long-term strategy developed within the boardroom.

To effectively manage a real estate portfolio that supports a business strategy, its performance needs to be measured. Nevertheless, almost one-quarter of the corporations do not use any real estate performance measurements.

Many companies are often not aware of the many possible cost saving opportunities on real estate expenses and fail to optimise the value, cost and contribution of real estate to their business.

Jan Siemons is a partner in Ernst & Young. E-mail: jan.siemons@nl.ey.com