Property management outsourcing has driven industry revenue growth despite the global financial crisis
Melbourne, Australia (PRWEB) June 08, 2013
The Commercial Property Management industry in Australia has been one of the big winners over the past five years. As a counter-cyclical industry, property management was not a primary focus of commercial real estate firms as it was easier to profit from sales and leasing activities. The advent of the global financial crisis saw a drop in the purchasing and leasing of commercial property. According to IBISWorld industry analyst Craig Shulman, “this led real estate firms to refocus, as they sought to move away from the volatile sales and leasing environment to the stable property management space”. As many of these firms were already involved in the industry in some capacity, it was easy to refocus towards property management activities.
Over the past five years, businesses have sought to cut costs in a more austere economic environment. This has led many companies to offload or outsource non-core company operations where possible, including property management. As many property management companies are well established, these players have been able to provide property management services effectively and at competitive prices. Shulman states: “these outsourcing initiatives have been the primary driver for the industry over the past five years, leading to a growing market and growing portfolios for many larger players”. Growing portfolios have assisted with operational efficiencies, leading to higher profit margins during this period. Consequently, over the past five years, revenue is estimated to have increased at an annualised rate of 13.1%. In 2012-13, revenue is expected to grow 6.3% to reach $888.7 million.
The next five years are not expected to be as favourable for the Commercial Property Management industry. As the mining sector diminishes, decision-makers are expected to try and bolster economic activity via the property market. Already, interest rates have dropped to an all-time low and banks are relaxing their previously stringent lending standards. Furthermore, incentives to outsource commercial property management activities are expected to decline as regulatory reform is anticipated to remove licensing fees for commercial property operators, making it cheaper for commercial entities to manage their own property. The Commercial Property Management industry operates at a high level of market share concentration. Major players in the industry include UGL Limited, CB Richard Ellis Pty Ltd and LPI (Australia) Holdings Pty Limited. For more information, visit IBISWorld’s Commercial Property Management report in Australia industry page.
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IBISWorld industry Report Key Topics
Firms in this industry manage commercial real estate on behalf of clients, or property that they do not own. Property management responsibilities relate to the overall operation of the property, including maintenance, rent collection, trash removal, security and some renovation activities. Firms may also help manage a property's accounting, but operations relating to the transaction of properties or real estate investments are not included in the industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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