There’s no doubting the Australian real estate landscape has changed over the years. In fact, the industry today is estimated to have over 12,300 businesses spread across the country, contributing $8.9 billion annually to the domestic economy.
Not so long ago it was a very different picture. Australian Bureau of Statistics data says that at the end of June 2003, there were only 10,000 real estate businesses in Australia, with income generated by these agencies totalling just over $7.5 billion for the 2002-03 financial year. Today’s figures represent a 23% growth in the number of businesses, and an increase of nearly 19% in revenue.
Rewind a decade, and the changes are even more telling: in June 1993 the real estate industry comprised only 7,200 businesses generating $2.8 billion in revenue.
Arguably, a key contributor to the real estate industry’s growth in this period has been the rise and rise of the property management sector. According to leading business researcher IBISWorld, property management provides almost 20% of all industry revenue – or around $1.75 billion. But with IBISWorld’s research predicting real estate industry growth to be close to 3% over the next five years, the property management sector could be worth more than $2 billion by 2015-16, of a total real estate industry valued at over $10 billion (see Tables 1a and 1b – IBISWorld statistics).
In many respects, the size of today’s property management industry reflects how attitudes to service, professionalism and property investment have changed in the last thirty years. Industry stalwart Jan Malmstrom, who started in real estate in the early 1970’s, remembers, “Twenty or thirty years ago, a handshake was good enough for a tenancy agreement. Also, you used to be able to lock a tenant out if they hadn’t paid their rent,” says Ms Malmstrom, who is now employed as a property investment management specialist with LJ Hooker. “But the legislation sets the boundaries now, and even though a lot of real estate agents and property managers would say it is sometimes weighted in favour of the tenant, having boundaries within which to operate is an extremely good thing.”
Indeed, many acknowledge the increasing impact of legislation with the rise of true professionalism in property management, to the point where agents need to be abreast of the latest regulatory changes to provide the service required by clients. Certainly, Tracy Billings, residential property manager for Raine & Horne Bondi Junction and Coogee/Clovelly in Sydney’s eastern suburbs, believes the legislation introduced in NSW in January this year has put the onus on property managers to be on the ball. “There were between 10 and 12 changes to the NSW Residential Tenancies Act at the end of January, and if you don’t know what they are, the tenants will – not to mention property owners and the media, which means that if you are not on top of your game, you could end up being the last person in the chain to know,” said Ms Billings.
For example, NSW landlords are now required to install water efficiency devices on taps in properties where the tenant is charged for water usage, while the notice period provided to tenants by landlords has increased from 60 to 90 days. Also, rental bonds have been capped at a maximum of four weeks’ rent, and tenants must be provided with at least one fee-free method for paying rent. “When you combine these changes with other rental property requirements such as smoke alarms, it creates more pressure on the property manager to ensure the rules are adhered to,” Ms Billings added.
Like Malmstrom, Billings remembers a time when property management was a different proposition, and tenants would walk in, pay their rent over the counter, and have a chat. “In some cases you were almost like friends with them, and it was much easier to put a face to a name. Now it is more anonymous – you meet a tenant once and then very rarely see them again, except when they leave the tenancy.”
Billings cites the increasing prominence of technology in the workplace as one of the key reasons for this shifting dynamic, with the completion of tenancy application forms a prime example. “Almost no one will fill out an application form and bring it in to the office on a Monday anymore,” she says. “Whereas once the leasing consultant would hold a Saturday open for inspection and use it as a good opportunity to go out and meet potential tenants face-to-face, now the forms are filled out online.”
One person who has certainly made the most of the technology boom is Mark Woschnak, Managing Director & CEO for leading rental property website rent.com.au. In 2005, Mr Woschnak sold his successful Sydney-based property investment business and moved back to his hometown Perth, where he started rent.com.au, Australia’s first national database comprised exclusively of rental listings. “RENT has now been fully operational for the last four years, and has grown from only 100 users in our first year to the point where we now have over 4,300 property managers uploading their content to the site today. This represents over half of all agencies with a property management department.”
By giving tenants, investors and property managers access to more information, technological innovation has been central to the property management industry’s development – but there has also been another outcome. Fiona Blayney, managing director of successful real estate consultancy and coaching business Blayney Potential Plus, explains. “Technology has created a more even balance between client relationships and service provision – previously if you had the relationship, service was secondary, because agents were just trusted to do their job,” says Blayney. “Now, we’re in the information age, and consumers can go online and Google anything, which means the client is sometimes just as informed as the agent. As a result, trust has been minimised and replaced with knowledge, so when someone rings an agent, they don’t just take what the agent says at face value.”