The future of our industry is changing. Automation, AI, customer cycles and employee retention are all part of what’s about to be shaken up right now and into the foreseeable future. However, before we can embark on looking into our crystal ball of the Real Estate industry, predominantly in Property Management, it is imperative for us to dissect the current landscape based on the insights garnered from the recently released Macquarie Bank 2023 Real Estate Industry Benchmarking Report. As Tony Robbins says your past does not equal your future, however the past can inform you what you’ve done right and where you need to improve. The report in essence surveys roughly 10% of the Real Estate industry and is an excellent source document and well researched data that provides great insight overall. In this CEO outlook, we will navigate through the challenges, trends, and strategic considerations that will define the trajectory of the real estate industry in the upcoming year and beyond.
A Stark Reality: Declining Profits and Revenue
Let’s address the elephant in the room – the decline in both overall company profits and revenue. The report reveals an 11% drop in profits and a 6% decline in revenue across the board. This sobering fact implies that the average real estate office is facing financial headwinds, a trend that may persist in the foreseeable future. Investors are adopting cost-cutting measures, and heightened competition is putting pressure on our commissions. In response, I recommend a strategic focus on training sales and business development (BDM) staff to enhance the value propositions offered, ensuring resilience and competitiveness in this challenging environment. In addition to this a proper understanding of your AAMI (Annual Average Management Income), fee structure and ideal client is essential to ensure you are making money and not supporting a decline.
Human Capital Conundrum: Staff Attraction and Retention
One of the key challenges illuminated by the report is the struggle with staff attraction and retention. Rising wages and a scarcity of qualified personnel pose significant impediments to growth, with 69% of surveyed agencies grappling with these issues. Unfortunately, the future is anticipated to exacerbate this situation. In light of this, investing in a Real Estate Virtual Assistant (VA) becomes not just a choice but a necessity. The report highlights that agencies maintaining or growing their rent roll in this challenging environment tend to run leaner teams that achieve higher output per team member. So how do you take on more business, with less local staff, reducing overheads and continuing growing your profits? As the CEO of Property Management Virtual Assistant, I strongly advocate prioritising the integration of specialised Virtual Assistants into your operations to streamline tasks, cut costs, and ensure efficiency. The fact is that agencies that put more pressure on local staff will continue to boost the attrition rate across the real estate industry.
The report succinctly encapsulates this trend. It is important to note that successful agencies are now leveraging outsourcing to achieve this level of success. I am proud to say that many of our clients fall into this category, demonstrating that outsourcing, when done strategically, can be a game-changer.
Strategic Outsourcing: A Path to Success
To recap, our industry has witnessed a decline in commissions and profits, faced challenges in staff recruitment and retention, and seen expenses skyrocket, constituting more than 60% of our overall costs. In the face of these challenges, I want to underscore the urgency of exploring outsourcing solutions, particularly through Virtual Assistants. If you haven’t considered this avenue or if past attempts were less than successful, now is the time to act.
At PMVA, we understand the intricacies of the real estate industry, and we specialise in providing Virtual Assistant solutions tailored to your unique needs. Don’t wait until you’re in dire straits; take proactive steps to stabilise your operations, cut costs, and safeguard the success of your business into the future. Reach out to us today, and let’s discuss how PMVA can be the strategic partner you need to thrive in these unprecedented times. One of the many benefits seen in the early results of implementing a VA is the amount of time you can give back to your Property Managers and Sales Associates, to give them back their time they can start to enjoy their role more and you can promote retention and stabilise your daily operations.
In the forthcoming blogs, we will delve deeper into the state of the real estate industry, exploring innovative strategies and insights to navigate the challenges and seize the opportunities that the future holds. Stay tuned for more in-depth analyses as we chart the course for success in the ever-evolving landscape of real estate.
Source reference: Macquarie Bank 2023 Real Estate Industry Benchmarking Report