In the traditional architecture of Australian real estate, property management has long been treated as an afterthought, a secondary administrative function operating quietly in the shadow of high profile, commission heavy sales divisions.
Yet, according to David Highland, CEO of Highland Property, a fundamental structural shift is underway that is redefining property management from a thankless operational division into a high yielding, resilient asset class.
Speaking on the rapid evolution of the residential market, David argues that traditional agency operational models are becoming obsolete; for decades, standard industry practice saw agencies running property management and sales together under a single, blended profit and loss statement.
David believes that legacy approach is doomed to fail in a market increasingly defined by technological disruption, tight margins, and shifting landlord expectations.
“If you are not adapting and moving with the times, it can either be your Achilles’ heel in a market like this,” he says. “If you are not innovating and growing those portfolios, just through organic churn, they will shrink.
“What we are seeing is a lot of the smaller operators who do not have economies of scale, who are not embracing the new technologies, they are folding in with the larger groups who are.”
At Highland, the scale of operation tells a very different story and over the past two years, the business has doubled its management footprint to 5,000 properties across its network.
Rather than treating the rent roll as a side project to support sales overheads, David has built the division as a completely independent profit centre.
“The old model of running a real estate office was typically you run one P&L, which has property management and sales in it,” David says. “The way that we are set up, it is its own silo.
“Property management is separate to sales. It is its own P&L, it has its own cost centre, its own tech, and its own leadership structure. With that, it becomes a specialised division. Even though one hand feeds the other in terms of property management and sales, they run independently.”
Technology, specialisation and talent drive the shift
Central to this modern structure is the rapid integration of artificial intelligence built specifically for property management operations and David describes the rise of AI as a game changing development for rent rolls, opening up operational efficiencies that were previously impossible under legacy human only systems.
“There is more innovation and more opportunity in AI in property management than probably what we are seeing in any other part of the industry at the moment,” he says.
“It gives us the capability to manage more properties, control costs, and continuously improve service levels through faster speeds and better accessibility for both tenants and landlords. The upside to all of that is predictability in cash flow, which really underpins the broader real estate business.”
Rather than replacing human oversight, AI is being deployed behind the scenes to handle time consuming administrative tasks and Highland Property is building custom AI bots to run tenancy reference checks, analyse tenant bank statements, and automatically source repair quotes from an approved panel of tradespeople.
“Where is the property manager’s highest and best value? That is dealing with the landlord and providing customer service,” David says. “What are the things that are non dollar productive? Chasing quotes through repairs. We are building out AI to achieve that.
“Within the next few months, we will have systems and processes in place that the AI will basically source the quotes for the landlord in collaboration with an approved panel of tradespeople. Imagine how much time it is going to save the property manager.”
This technological buffer also allows agencies to recruit and retain higher calibre staff by establishing specialised roles rather than burning out generalists; Highland’s 60-strong property management team includes a dedicated new business department whose sole focus is onboarding landlords and managing tenant pipelines.
“New business is its own team,” he says. “We don’t have a new business manager who’s managing property. Their key role and their key function is to attract new landlords, onboard them in the most efficient and professional standards available in the industry, and make sure that we are achieving the benchmark for rent. They are farming tenants, running pipelines of tenants, and targeting executive leasing.”
“At an industry level, typically, property managers play second fiddle to sales,” he says. “That is completely the opposite in our business. This is our asset. This is our revenue. These are a key part of our business, and it is treated with the same amount of care, the same amount of pride, and the same amount of vision as a sales department is.”
Stability and valuation in an uncertain market
Beyond internal agency mechanics, macroeconomic factors and investor demographics are further cementing property management as a prized asset class.
With interest rates remaining elevated and potential legislative changes around investor tax rules, landlord behaviour across New South Wales is shifting toward long term holding strategies.
David points out that as investors adjust to market conditions and grandfathered tax provisions, investment properties are staying in portfolios far longer than in previous cycles, reducing traditional portfolio churn.
“After July next year, if they haven’t sold their properties between now and July, you are less incentivised to sell your properties because it is the one asset that you are going to have as an investor that is now grandfathered in terms of negative gearing,” he says.
“A common sense approach to property investment would say that you are going to have less landlords sell their investment properties. That means our rent rolls are going to get more stable, more sticky. Rents will continue to go up, and our fees will follow those rental increases.”
As agency consolidation accelerates across the country, the traditional valuation model for rent rolls, historically based on simple fee multiples, is giving way to institutional grade recognition.
For David, agencies that treat property management as an active, tech empowered funds management business will dictate the future of the property industry.
“That conversation is shifting with large scale property management businesses because you have predictability in revenue. It is almost becoming a funds management business. Large scale agencies are now trading their property management divisions like its own asset class, and a specialised approach is how we not only grow and maintain, but how we excel.”