WA Real Estate Forum 235 St Georges Terrace - 12th, September

WA Real Estate Forum
        12th, September
    235 St Georges Terrace

Over whelming response!

Welcome
•   Introduction
      – Why WA Real Estate Forum
      – The Forum explained
      – On the Spot

•   Speakers
     – Mark Woschnak, CEO of rent.com.au
     – Domonic Thompson, Head of Real Estate WA/SA
     – Mark Sinclair, CEO of Realestimations

•   Q and A

•   Forum

Introduction
•   Why WA Real Estate Forum?
     – Changing times
     – Uncertainty, confusion and hesitance exists
     – What used to be is no longer
     – Need answers, support and direction for WA
     – Practical, real, first hand, peer to peer feedback

•    The Forum will facilitate:
     – Awareness of the common issues to manage
     – Threats to minimise and opportunities to grow
     – Hands-on advice to take back to your office and implement
     – Where and how to get assistance
     – Knowledge of trends, products and service

•   For all Agents
     – Sales or property management
     – Small or large
     – REI and non-REI practitioners

Forum Format
Format
- Every 3 months
- 2.5 hours
    - 5.30 for 6pm    - 30 minutes networking
    - 6 – 6.15pm      - Intro
    - 6.15 -7pm       - 45 minutes ‘knowledge’ session (speakers/panel experts)
    - 7 -8pm          - Forum with peers

Forum Value
•   Small groups of 8 for a 1 hour discussion

•   Discuss the topic(s) of the evening
     – Ask for advice
     – Share successful experiences, strategies and operations

•   Team leaders manage groups

•   Confidentiality/Competition – share what you want to share

•   The value of the forum, is how much you contribute.

Issues you’d like to discuss

Next time…
1.   Leave ‘not enough sales’ and ‘consumer confidence’ for another session

Tonight's Topics
1.    Mark Woschnak – CEO of rent.com.au
     –    Major shifts occurring
     –    rising costs of marketing
     –    Big Picture in rentals

2.    Domonic Thompson – Head of Real estate WA/SA, Macquarie Bank
     –    How to create a good rent roll – Bank vs Best Practice

3.    Mark Sinclair, CEO of Real Estimations
     –    How to create a good rent roll – analysing performance and valuation

•    Forum Topic

“The changes you need to make to address issues affecting your business”

On the Spot

Q1   Is the vacancy rate in Perth higher or lower than the national average?

     Head   = within 10%
     Arms   = higher
     Back   = lower

On the Spot

Q2   Is the vacancy rate in Perth forecast to rise or fall?

     Head    = rise
     Back    = fall

On the Spot

Q3   At the last census (2007 report), what % population rent?

     Head   = not more than 25%
     Arms   = 25-30%
     Back   = 30% plus

On the Spot
Q4   What % of the renter population moves each 12 months?

     Head   = 35% plus
     Arms   = 25-35%
     Back   = not more than 25%

On the Spot

Q5   What % of all investment properties are managed by ‘non-agents’?

     Head   = 15-25%
     Arms   = 25-40%
     Back   = 40% plus

On the Spot
Q6   As at July 2011, what is the average % income paid on a mortgage?

     Head   = 20%
     Arms   = 30%
     Back   = 35%

On the Spot

Q7   At 2007 Census - What % of all properties are investment properties?

     Head   = 20-25%
     Arms   = 25-30%
     Back   = 30% plus

On the Spot

Q8   How many rental properties listed by Agents do you think are currently on
     the Australian market at any one time?

     Head   = 35-45,000
     Arms   = 45-55,000
     Back   = 55-65,000

On the Spot

Q9   How much did Agents spend in online advertising in FY 2011 compared to
     FY2010?

     Head   = about 50% more
     Arms   = about 25% more
     Back   = about the same

The big rental picture!
Mark Woschnak – CEO of rent.com.au

Major Shifts toward rentals
A fast growing proportion of the population are renting

Major Shift # 1 - Housing affordability significantly changed over 10 years

Major Shift # 2 - Greater difficulty to get a loan

Source: Housing Industry Association & REIWA

Major Shifts toward rentals
 Major Shift # 3                 - First Generation of renters that expect to always rent
                                 - similar to trends in USA, UK and Europe

         Insert chart of renters outlook here

Source: rent.com.au ‘Renters Survey July 2011’

Major Shifts toward rentals

Source: rent.com.au ‘Renters Survey July 2011’

Major Shifts toward rentals
Major Shift # 4 - Increasing investment into ‘residential property’ as an asset class

        - demand by renters

        - undersupply of overall future property requirements

        - better investor education

        - preference to stock market (especially baby boomers)

        - preference by many SMSF’s

        - good time to buy (lower prices)

        - good short/medium term outlook for vacancy rates

Major Shifts toward rentals
   •   Vacancy rates reducing

Source: RIEWA

Forecast Perth Rental Vacncies
•   Continued decline to near record lows over next 4 years as housing availability declines, and
    Perth population grows

Increased Agency focus on rentals
Major Shift # 5 - Agencies focus on rental department

    –    Sustainability
    –    Profit Centre
    –    Investor relations hub
    –    Future database of sales
    –    Exit value strategy

        Over 3,000 agencies joined rent.com.au over the last 6 months.

Major Shifts toward rentals
Major Shift # 6 – swap the focus

From sales getting PM’s to PM’s getting sales

Substantial rent roll business awaits

          + growth forecast in renter numbers
          + growth in rental properties required
          + rental demand
          + rental increases
          + foreseeable future of low vacancy rates
          + steady supply of sales from investor relations database

          = significant growth in rent rolls, cashflow, sales and business asset value

Contemporary Issues
•   Did you know that 46% of rental properties are managed by non-agents?

Private Rental Market in WA

      2010 (Estimate)                                                                          No.           %
      No. of Renter Households renting from State Housing, defence etc, Nationally             548,227       22.8%
      No. of Renter Households renting from Private Landlords Nationally                     1,851,773       77.2%
                                                                                       Total 2,400,000       100%

•      185,177 rental properties in WA (Based on 10% of Aust. Population)
•      @ 46% Private = Over 85,000 private listings to target in WA

•      Major Shift # 7 – untapped and growing private landlord market.

    Source ABS: 2006 Census of Population and Housing – (46% of properties not managed by Agent)
    # 2010 estimate based on 6% population growth from 2007 to 2010 on ABS Rental Housing Census Data 2007

The rise of On-line Marketing
All advertising mediums flat lining or reducing – except online

Growth in On-line Marketing

Source: PwC Online Ad Expenditure Report FY2011

Rising Costs of Marketing
•     REA Statistics (includes
      realcommercial.com.au)
        – Revenues are up by 20%
        – Monthly average revenue per
           agent (ARPA) up 15% from
           $1,267 in June 2010 to $1,456
           in June 2011.
        – Average 15% YOY
        – 26% revenue growth in media
           business (advertising)

    Source: REA Group FY11 Analyst and Investor Presentation

On-line Marketing in Australia

                                                  50% growth, still one
                                                  of the lowest sectors
                                                  by comparison

Source: PwC Online Ad Expenditure Report FY2011

Increase in On-line Marketing
       Online video advertising expenditure

       FY 2011                       FY 2010
       $38.8m                        $25.3m

       $13.5m
       53%

      Email advertising expenditure

      FY 2011                       FY2010
      $33.1m                        $33.8m

      $0.7 m
      2%

Source: PwC Online Ad Expenditure Report FY2011

Growth in Mobile devices for searching

Source: Real Estate Business Online – ‘Mobile devices lead way in property searches’ (2 Sept 2011)

Combat Rising Marketing Costs

1.Use as many FREE resources as possible
  – List on many sites to increase exposure and enquiries

Traditional On-line Strategy                New On-line Strategy
                                            Includes Free Property Portals

Realestate.com.au                           Rent.com.au
Domain.com.au                               Homehound.com.au
Agent’s Own website                         Thehomepage.com.au
Franchise Website                           Homesales.com.au
REIWA.com                                   … and more

                                            = 2,000,000+ extra visitors p/m exposure

Cost: $1,000’s per month                    = no additional cost (* upgrades available)

Combat Rising Marketing Costs
2.   Spend more on your own website

3.   Extend referral and word of mouth campaigns

4.   Increase walk-in traffic

5.   Use existing databases and build lists

6.   Automate

7.   Avoid generic advertising

8.   Use portal uploaders/property management software providers that load to many portals

9.   Increase vendor paid advertising

No more than 35% of Agents charging vendors for marketing in addition to their commission.

Building your rent roll
• Improve your people skills (walk-ins and word of mouth)
• Improve your own site and advertise on property portals

  Source- rent.com.au Agent Survey August 2011

Building your rent roll
       Investors want property managers who are personable and professional, and who
       have strong local branding

Source- rent.com.au Landlord Survey 2011

Building your rent roll

Source- rent.com.au Landlord Survey 2011

Building your rent roll
         Learn more about the habits of your key clients - renters and landlords

Source- Nielsen Panorama – June 2010 to August 2011