INDUSTRY NEWSNEWS

Rent rolls across Eastern states hold value but fees are falling

The median value of a rent roll across Australia’s Eastern Seaboard is worth $400,012, data from a specialist rent roll broker shows.

Real Estate Dynamics Annual Rent Roll Market Report also shows each property in the rent roll earns a median average annual management income (AAMI) of $1457 in the 2020-2021 financial year.

Real Estate Dynamics Chief Executive Officer Nathan Brett said the figures come from the 101 rent rolls the group sold in the 20/21 financial year, with an average of 2.8 formal offers per contract signed.

“Buyer inquiry has been at an all-time high in the past financial year,” he said.

“There have been 101,123 views of our listed rent rolls, real estate agencies and strata businesses for sale.

“These numbers highlight that demand is high and available stock is much lower than demand. This is good news for sellers.”

Mr Brett said last month there had been 3849 visits to Real Estate Dynamics’ website searching for rent rolls and they had spoken with 117 qualified buyers.

“For many years we’ve been saying the larger will get bigger by a number of methods, but many are buying their smaller competitors and simply adding them to their rent rolls for additional, accelerated growth and efficiency,” he said.

Data from the group’s RED Datawarehouse also analysed numbers from clients in consultancy work, health checks and business diagnostics.

It reports that the average rent roll size across the Eastern Seaboard is 309 properties.

But Mr Brett said there continued to be downward pressure on management fees, with the Eastern Seaboard median AAMI falling from $1469 in the 2019-2020 financial year to $1457 in the 2020-2021 financial year.

The average management fee dropped from 6.98 per cent to 6.8 per cent in the same period.

“Consumers want better, faster, easier and, in most cases, cheaper, so that has an impact,” Mr Brett said.

“I believe that a lot of agencies on the property management side, perhaps aren’t as well trained as they ought to be in sales and negotiation to be able to maintain a reasonable fee.

“So what often happens is they compete on either price, or quality of service, and a lot of them go for price.

“Then it becomes a bit of a domino effect sometimes for the ones that are untrained.”

Mr Brett said property managers should ensure they regularly trained and updated their skills so they could demonstrate true value to clients rather than discounting their fee.

“Offices that we look after, in terms of membership, nearly all of them have a business development manager solely responsible for growing the property management side of the business,” he said.

“Everyone that is growing has a business development person or a business development team, but everyone we speak to who isn’t growing, or is suffering negative growth, does not have a business development manager.”

Source: Real Estate Dynamics

Queensland

In Queensland the median value of a rent roll in the 2020-2021 financial year was $442,102, with the median AAMI climbing from $1591 to $1698.

The average management fee also jumped from 7.27 per cent to 7.43 per cent, while the median weekly rent rose $23 per week to $434.

Mr Brett said the Sunshine State had always held its fee level well compared to NSW and Victoria. 

“There have been a lot of people relocating from the southern states to Queensland and that has influenced the property market generally and, of course, the investment market,” he said.

“There are very low vacancy rates through most parts of Queensland so prospective tenants have little to choose from, so yields would be very high.”

Of the 11,595 properties transferred across the Eastern Seaboard, almost one-third (3534 properties) were in Queensland.

New South Wales

Even though rents increased in NSW in the 20-21 financial year, rising from $360 per week to $411, management fees fell from an average 6.65 per cent to 6.57 per cent. 

The median AAMI also dropped $101 to $1290.

The median value of a NSW rent roll was $314,825, with $15.6 million worth of rent rolls transferred in the 2020-2021 financial year.

This is up from $12.725 million in the previous 12 months.

Victoria

In The Education State, the median rent roll value was $369,689.

“The appetite for Victorian rent rolls is very high; yet it has the lowest AAMI across the Eastern Seaboard,” Mr Brett said.

The median AAMI for Victoria was $1140, down from $1442 the year before. 

The average management fee also dropped from 6.67 per cent to 5.94 per cent in the 20-21 financial year.

The median weekly rent also fell from $414 per week to $380 per week.

Mr Brett said many agencies were also reporting higher than usual sales from their rent rolls to owner-occupiers.

“The reason for the sale of investment properties could be a combination of significant legislative changes across Victoria, as well as the property owner’s battle weariness from COVID-19,” he said.

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Kylie Dulhunty

Kylie Dulhunty is the Deputy Editor at Elite Agent.