Are Agencies Losing Touch?
Sydney Morning Herald
Friday October 27, 1995
A property manager these days is expected to be a career property professional, probably with a formal valuation training. Today's manager must understand the characteristics of property as an asset class and be adept at the techniques used to measure the performance of an asset. We are taught the techniques used to reposition a property in the market, the preparation of asset or marketing plans, financial budgets, discounted cash flows and performance analysis. We are told that the days of the property manager being the person you phoned to get the roof fixed or collect the rent are long gone. But are they?
The expectations of a property manager have taken a quantum leap over the past 10 years. We tend to describe ourselves as asset managers in an attempt to reflect this change. But what is really important to the investor? Are we losing touch with market requirements?
Ask clients what they see as the most important aspects of a property asset manager's role and they give three priorities:
* Keep arrears to a minimum;
* Minimise vacancies;
* Maintain the asset in the most cost-effective way.
This seems obvious enough, but how many of us stress our expertise as asset managers and perhaps think of sound property management as an outdated concept or something that can be taken for granted? I would make the following points.
First, there is an increasing tendency toward indirect property investments. This can be effected through securitisation or more often through listed property trusts or managed funds. Institutions managing those funds or trusts will not need the services of an asset manager - that is their role. What they require is a property manager who understands their needs and complexities of the market, but more importantly can get the basics right.
Second, there is increased competition for some traditional aspects of the property manager's role. A number of large service organisations are marketing "total service maintenance" packages. Mercantile agencies can collect arrears, and investors have for some time had direct access to leasing agencies.
Property managers have long been known for their attention to detail. This is sometimes considered to be an old-fashioned virtue, but in this lies our true strength. By all means we must, as an industry, look forward to the challenges that a more complex and sophisticated property market brings, but we forget our traditional values and roles at our peril.
© 1995 Sydney Morning Herald