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Rent roll values rise across the eastern states

The median value of a rent roll across Australia’s eastern seaboard has risen to $470,657, new data from a specialist rent roll broker shows.

Real Estate Dynamics Annual Rent Roll Market Report for the 2021-2022 financial year shows the median sales price of a rent roll in Victoria, NSW and Queensland increased 16.2 per cent in the past year.

Real Estate Dynamics Chief Operations Officer Brad Miller said the brokerage department transferred 10,264 properties over the 12-month period, with a combined annual revenue of $15.26 million.

He said demand for smart acquisitions fuelled the increase in the median rent roll value.

“We received an average of 4.4 formal offers to purchase per signed contract of sale,” Mr Miller said.

“This was almost double the previous financial year.

“We’re definitely seeing a trend with more savvy principals looking to have more property management assets in their business.

“They’re really looking to invest in that recurring revenue.”

The report also showed that one standout trend in the 2021-2022 financial year was an increase in the number of rent roll owners selling low profit or unprofitable sections of their rent roll.

Mr Miller said business owners were analysing the cost of servicing each management and often deciding it wasn’t in their best interests to keep properties outside their core geographical area due to the time and travel costs involved.

“Business owners were slicing off and selling parts of their rent roll and staying in business with a more profitable asset, along with the capital raised from the sale” Mr Miller said.

The average annual management income (AAMI) per property decreased slightly in the 2021-2022 financial year, falling from $1509 to $1488.

This was influenced by a higher number of partial sales of Victorian rent rolls where the AAMI of properties transferred returned a lower commission.

Source: Real Estate Dynamics

Victoria

In Victoria, only 1292 properties were transferred in the 2021-2022 financial year, for a median rent roll value of $310,001. Transaction volumes remained strong, but 44 per cent of the portfolios sold comprised fewer than 80 properties. 

“The smallest parcel was just 11 properties,” Mr Miller said.

“The contract value ranged from a small parcel sold for $29,630 to a larger parcel of $1,209,540, with an average value of $434,513.”

Victoria recorded the lowest AAMI of the three states at $1132, with decades of downward pressure on management fees and an increase in partial rent roll sales, behind the figure.

The state also recorded the lowest average management fee, which fell from 5.44 per cent in the September 2021 quarter to 4.85 per cent in the June quarter, before finishing the year at 5.14 per cent.

However, Victoria did record the highest median weekly rent of $420 as well as the highest multiplier of $3.70.

Queensland

Queensland contributed the largest volume of transferred properties at 5691 in the past financial year. This was an increase of 47 per cent on the year prior, partly due to Real Estate Dynamics adding several new brokers to the team.

The median value of a rent roll in Queensland is $291,665, with each property generating an AAMI of $1594.

“The contract value ranged from a small parcel sold for $47,462 to a larger parcel of $2,398,973, with an average value of $642,818,” Mr Miller said.

“Of the rent rolls transferred across the East Coast, the data shows Queensland charges an average management fee of 7.45 per cent, which is about 0.5 per cent higher than NSW and 2.3 per cent higher than Victoria.” 

NSW

In NSW, 3281 properties were transferred in the 2021-2022 financial year, which was a 30 per cent drop on the previous year.

The state recorded an AAMI of $1457 and a median weekly rent of $408, both of which highlight stability in the market over time.

Contract values ranged from a small parcel sold for $117,789 to a larger parcel of $2,198,523, with an average value of $839,380.

“NSW has had its third consecutive financial year of growth in the average multiplier placed on the dollar value, as well as a solid increase in the average management fee,” Mr Miller said.

“One-third of the rent rolls transferred in NSW achieved a multiplier greater than $3, highlighting the continuing strength in demand.”

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Kylie Dulhunty

Kylie Dulhunty is the Deputy Editor at Elite Agent.