Profitability has been named the biggest challenge in the real estate industry courtesy of falling transaction volumes, according to new analysis.
Data for a new Market Outlook RE Leaders Insight Report, released exclusively to Elite Agent, surveyed MRI Software Client Advisory Board (CAB) members and found financial success is the number one concern for real estate leaders this financial year.
Every CAB member said building and maintaining profit margins were the main issues for agencies as the impact of higher interest rates has slowed the market down.
MRI Software, APAC, Director of Strategy, Josh Symons said while profitability remains a concern for the industry, agency leaders remained optimistic about the future as the market recovers.
“Agency leaders are telling us that they’re really feeling the pinch of a significant downturn in revenue across the country, mainly driven by lower transaction volumes,” Mr Symons said.
“There remains a strong optimism but a reality check that laser focus is required to navigate fast-paced changes.”
BresicWhitney, Head of Property Management and CAB member, Chantelle Collin, said property management businesses were also concerned about profitability.
“Rising costs are definitely a factor, as well as the downward pressure on fees over a number of years, (which) has led us to where we are,” Ms Collin said.
“We’ve got to look at ways to be more productive, efficient and streamlined so we don’t have those concerns around profitability.”
The other leading challenges the CAB members said the industry was focused on was the ongoing technological changes, with 75 per cent highlighting challenges with digital optimisation and how to extract value from that.
Meanwhile, 67 per cent said there were also hurdles with talent acquisition, retention and upskilling to meet the digital future.
Half of the CAB members also worry about increasing revenue from ancillary products and services.
Ms Collin said the change management element of the digital transformation was one of the biggest challenges their business faced.
”While we’re coming out the other side of the digital transformation, there’s still a way to go and that’s where we need the platforms and digital tech that we partner with to really help us stay on that journey and allow us to operate more streamlined and efficiently,” she said.
Mr Symons said the early insights showed the urgency behind being agile and adaptive.
“Agency leaders are on board with the efficiencies PropTech can bring, they are now looking to close the gap between adoption and time to value,” he said.
“Clients are asking about more automation to help with managing rising wage costs, for example.”
The findings were shared with CAB members at the last meeting MRI hosted at its George St headquarters and online.
Member attendees included Ben Sahyoun, Cassandra Lantry, Lindsey Burne, Anita
Percudani, Andrew Graham, Bradley Brown, Chantelle Collin, Simon Jonanovic, Brent May, Dean Mackie, Nick Carah, Bradley Brown and Adrian Butera.
At a business level, the number one challenge for 91.6 per cent of agency bosses was rising operational costs, followed by 50 per cent that said they needed to find better efficiencies to run the business and 50 per cent said there were problems meeting staff salary expectations.
While 41 per cent said identifying and growing future market segments and/or innovation opportunities for growth was also a challenge.
For teams, 75 per cent said listing lead generation for sales and property management, and meeting customer expectations, was the main challenge.
Keeping up with technology was a concern for 58 per cent of members, while 50 per cent said clear career progression pathways also presented some issues.
Mr Symons said agency leaders continued to seek the best ways to use technology.
“We’re hearing that agency business leaders recognise they need the ability to adapt quickly, choose the right technology stack that propels teams to build, iterate and scale
digital experiences faster than ever before,” he said.
MRI Software is now looking to expand its survey across the broader industry to gain better insights into what challenges are most relevant in the current climate.
Follow MRI Software on LinkedIn to be notified when the Real Estate Leaders Market Outlook Report is available to download.
