Philips aims to save millions on real estate

Dutch electronics company Philips plans to save hundreds of millions of euros on its global real estate in the next five years, according to Kees van der Linden, director of Philips Real Estate. The emphasis will be on Europe. Philips annually spends some EUR 1 bn on maintaining its factories, offices and other properties worldwide. The company’s real estate assets are valued at EUR 1.2 bn, with over half (55%) located in Europe. Two thirds are owned outright, while the remainder is leased. Van der Linden said at a real estate symposium in the Netherlands last week that the European share of Philips' property portfolio would probably decline as the company is gaining ground in countries with strong economic growth, in particular in Asia.

The company is not just selling more goods there, but is also moving production facilities to low-wage countries in the region. As a result, a growing number of production facilities in Europe are becoming obsolete. In addition, outmoded buildings are being replaced with new ones that meet all the modern requirements. The shift is particularly apparent in Eindhoven, the Dutch city where Philips began its light-bulb factory over a century ago. Seven years ago, the company had 1.3 million m² of property in Eindhoven but this has since fallen to 1 million m² due to closures and sales. By 2010, the total will decline further to 600,000 m2, Van der Linden said.