Income generated from property management looks set to plateau for agencies in the next few years, after surging during what has been an unstable sales market.
According to the Macquarie Relationship Banking 2012 Residential Real Estate Benchmarking Report, released late last month, total income generated for real estate agencies from property management jumped from 29 per cent in 2007, to 42 per cent in the last 12 months.
But the report also forecasts that property management’s share will rise by just one per cent in the future.
Graeme Baxter, managing director at ACTON in Western Australia, agreed that property management growth will slow down.
“I think we’ll see it plateau off, yes. As the sales market recovers, that will come back somewhat,” he told Real Estate Business. “Traditionally property management income is somewhere between 20 and 30 per cent. To find it at 42 per cent would be an anomaly based on the slower sales market.”
But even with a recovering sales market, agents will continue to grow their rent rolls.
“The benefit that most people see is the cash flow, because it is such a regular cash flow,” Mr Baxter continued. “And the asset value of your business which is in direct correlation with your rent roll.”
“I don’t think it will slow down, it’s just the sales market will recover and, as a percentage overall income [agencies] will rely more on sales,” he said.
Shaun Bassett, head of the residential real estate segment at Macquarie Relationship Banking, told Real Estate Business that prinicpals will continue to rely on property management in the coming years.
“Thirty per cent of agents who responded to our survey told us that they don’t anticipate any growth in sales in their regions over the coming year,” he said. “We anticipate a continued focus on property management which reflects in the survey in terms of a more balanced focus between sales and property management from an agency.”
The report, which is made up of responses from 416 agencies across Australia, also revealed that the average rent roll has grown from 375 in 2009 to 436 in 2012 in terms of properties under management (PUM), with agencies across all states having demonstrated positive growth.
Leah Calnan, director at Metro Property Management in Victoria, said even though many principals traditionally lean toward sales, she believes there is “no end in sight” to property management’s growth.
“I don’t believe [property management's growth] will slow down, mainly because of the diversity of the national market," she told Real Estate Business.
“Perth is booming at the moment, and the Northern Territory is about to take off. Rental vacancy rates are quite low. Victoria might be struggling but I don’t think it’s across the country,” she said.