Industry benchmark survey to reveal key trends

Simon Parker

Challenging sales markets are likely to have pushed more principals to build up recurring income streams, largely through beefed-up property management businesses, Shaun Bassett, head of the residential real estate segment at Macquarie Relationship Banking, said ahead of the lender’s upcoming Real Estate Benchmarking Survey.

In a wide-ranging interview on what the next Benchmarking Survey might show, Mr Bassett told Real Estate Business that anecdotally at least, property management remained a key focus for most real estate businesses.

“Because of [tough] market conditions, and needing to shore up recurring income lines and an ability to build sustainable businesses, a continued strong focus on property management [has been evident].

“We’ve also seen a lot of instances of smaller rent rolls coming onto the market…and that’s country wide,” he said.

“When I say smaller rent rolls, we’re talking about the circa 100-130 managements. There’s been a lot of consolidation of larger rent rolls, so again, probably when we see the survey and the results we might see that continued focus on property management and growth there.”

Research for the next Macquarie Relationship Banking Real Estate Benchmarking Survey will be conducted in February, with the results due to be published in April or May.

In the most specialist lender’s most recent Real Estate Benchmarking Survey, which was conducted in 2009, 88 per cent of respondents said they were looking to grow their property management business via organic growth, and less than five per cent indicated they were looking to sell their rent roll.

The 2009 survey also revealed that average days on market had slipped from 47 days in the 2007 survey to 67 days in 2009; the average agency listings split was 83 per cent private treaty versus 17 per cent auction; one third of agencies reported that a full time property manager was handling between 101 and 150 properties; and two-thirds of agencies expected to take on additional staff in the 12 months after the survey.

Other key findings were sales commission rates had increased in the two years from 2007, albeit marginally, to 2.50 per cent (including GST), while 45 per cent of agencies said they had made significant changes to their business as a result of the Global Financial Crisis (GFC). Anecdotal evidence suggests this change has continued in the years since 2009, according to Mr Bassett.

“From what we’ve seen within the businesses that we bank, and the prospects we’re out there talking to, there’s been a lot of consolidation within businesses, and businesses getting leaner and meaner.

“An effect of that is we might see less of an appetite for principals to take on new staff members. If they’re losing staff members, or moving staff members off their payroll…they’re not replacing them as readily as they once were.”

“There’s a focus on building the rent roll, so taking someone who perhaps isn’t performing as well as others in a tough sales market, a sales person, into perhaps a business development (BDM) role within property management, which is [also] a sales-type role. There is that shift.”

Cash flow remains paramount in tougher times, he said.

“What we are seeing within businesses in the market, and this is all businesses we’re talking to, is added cash flow pressure,” Mr Bassett said.

“That could be the result of a couple of factors. It could be the result of increased days on market, and it can also be a result of lower sales volumes.I suspect it could be a combination of both…it will be one of those statistics that will come out in the report that I’ll be interested in seeing.”

“The businesses that are surviving are building market share, as other players fall out of the market, but they’re not going to see the benefits of that until we see an upswing in the volumes of transactions,” he continued.

“In the meantime, [agency businesses should be] building property management, getting lean in terms of expenses, and probably, like I say, upskilling in property management [and sales].”

Simon Parker

Challenging sales markets are likely to have pushed more principals to build up recurring income streams, largely through beefed-up property management businesses, Shaun Bassett, head of the residential real estate segment at Macquarie Relationship Banking, said ahead of the lender’s upcoming Real Estate Benchmarking Survey.

In a wide-ranging interview on what the next Benchmarking Survey might show, Mr Bassett told Real Estate Business that anecdotally at least, property management remained a key focus for most real estate businesses.

“Because of [tough] market conditions, and needing to shore up recurring income lines and an ability to build sustainable businesses, a continued strong focus on property management [has been evident].

“We’ve also seen a lot of instances of smaller rent rolls coming onto the market…and that’s country wide,” he said.

“When I say smaller rent rolls, we’re talking about the circa 100-130 managements. There’s been a lot of consolidation of larger rent rolls, so again, probably when we see the survey and the results we might see that continued focus on property management and growth there.”

Research for the next Macquarie Relationship Banking Real Estate Benchmarking Survey will be conducted in February, with the results due to be published in April or May.

In the most specialist lender’s most recent Real Estate Benchmarking Survey, which was conducted in 2009, 88 per cent of respondents said they were looking to grow their property management business via organic growth, and less than five per cent indicated they were looking to sell their rent roll.

The 2009 survey also revealed that average days on market had slipped from 47 days in the 2007 survey to 67 days in 2009; the average agency listings split was 83 per cent private treaty versus 17 per cent auction; one third of agencies reported that a full time property manager was handling between 101 and 150 properties; and two-thirds of agencies expected to take on additional staff in the 12 months after the survey.

Other key findings were sales commission rates had increased in the two years from 2007, albeit marginally, to 2.50 per cent (including GST), while 45 per cent of agencies said they had made significant changes to their business as a result of the Global Financial Crisis (GFC). Anecdotal evidence suggests this change has continued in the years since 2009, according to Mr Bassett.

“From what we’ve seen within the businesses that we bank, and the prospects we’re out there talking to, there’s been a lot of consolidation within businesses, and businesses getting leaner and meaner.

“An effect of that is we might see less of an appetite for principals to take on new staff members. If they’re losing staff members, or moving staff members off their payroll…they’re not replacing them as readily as they once were.”

“There’s a focus on building the rent roll, so taking someone who perhaps isn’t performing as well as others in a tough sales market, a sales person, into perhaps a business development (BDM) role within property management, which is [also] a sales-type role. There is that shift.”

Cash flow remains paramount in tougher times, he said.

“What we are seeing within businesses in the market, and this is all businesses we’re talking to, is added cash flow pressure,” Mr Bassett said.

“That could be the result of a couple of factors. It could be the result of increased days on market, and it can also be a result of lower sales volumes.I suspect it could be a combination of both…it will be one of those statistics that will come out in the report that I’ll be interested in seeing.”

“The businesses that are surviving are building market share, as other players fall out of the market, but they’re not going to see the benefits of that until we see an upswing in the volumes of transactions,” he continued.

“In the meantime, [agency businesses should be] building property management, getting lean in terms of expenses, and probably, like I say, upskilling in property management [and sales].”

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