Mid Year Market Update - June 2024

We’re nearly half way through the year and there has been a lot of activity. Carrying over from 2023 cashflow is still king, and businesses must stay on top of this as some real estate businesses go into their quietest period prior to Spring campaigns starting.

These are some of the hot topics when it comes to rent roll and property services business sales:

1.     Rent Roll Multipliers

2.     Cashflow is King

3.     Too Big or Just Right

4.     Tired or Right Time to Get Out

Rent Roll Multipliers – Stabilised and holding. Quality rent rolls are in demand with solid Average Annual Management Income per property. In Sydney's Eastern Suburbs the magic number is still $4.00 per $1 of annualised management income. Many small transactions are happening in the marketplace as larger agencies snap up under sized rent rolls. For an update on metropolitan Sydney multipliers, give Matt a call on 0414 668 972 or email matt@mcrrb.com.au.

Cashflow is King – Fast moving interest rate rises in the last 2 years has seen personal debt and business debt increase and impact cash flows of businesses. This has meant in some instances some insolvency events in late 2023 and 2024 is shaping up to mirror last year or even surpass it. It has not helped that sales reliant businesses, rather than balanced PM and sales business, have suffered with sales volumes in 2023 and 2024 down by up to 40% based on year on year before and during Covid.

Too Big or Just Right – Larger rent rolls for sale are proving to be stubborn with more time and perseverance becoming the key to unearthing the right buyer. Whereas smaller rent rolls, when priced right, have seen stronger interest. Those valued under $1.5m - $2m are a good addition to an existing business looking to grow. What is consistent across both categories is that keen buyers want an already performing sales team attached to the rent roll. The question on the tip of everyone’s tongue is 'why are the Principals selling?'!

Tired or Right Time to Get Out -  Covid was hard work. Remunerations went up across most PM businesses, rents dropped, but then came back. Vacancy rates were high, but now they’re at an all time record low. Landlords are feeling the pinch with burdened higher interest costs and repayments, and any burgeoning sales are coming off the back of exiting investment properties, coupled with a double edged knife of a reducing rent roll. The Covid lag is real and Principals looking to retire are playing catch up. Their asset value is at an all time high due to high rents and low vacancies, but is time running out as portfolio sizes dwindle?

As we go into the second half of 2024 we always see more activity with the run into Christmas. It pays to be organised and plan ahead in order to get the best outcome.

For a confidential chat, please feel free to call Matt on 0414 668 972 or email matt@mcrrb.com.au.