Global Property Management Industry
The global real estate management and development industry was worth more than $479 billion in 2011, having recorded a yearly change rate of -0.5% for the four preceding years, reports MarketLine. The residential segment led the industry in 2011, generating revenue in excess of $272 billion and accounting for almost 57% of the overall market in terms of value. Market growth is expected to pick up to a yearly change rate of -0.1% between 2011 and 2016, bringing the market to $477 billion.
Companies operating in the global real estate management and development industry are involved in the management of both residential and non-residential real estate. Property management firms fulfill a range of tasks, including collecting rent, removing waste, providing security, leasing and other activities related to the smooth running of any property. These firms constitute a means of communication for owners and renters. They are in charge of vetting potential renters by checking their credit history, rental history and the tenant’s ability to pay rent.
Property management also entails drawing up the necessary legal documents pertaining to property rental. Enterprises involved in this industry also act as mediator between renter, owner and insurance companies in the event of damage to property or maintenance issues. Technology continues to play an increasingly important role in property management with the use of computer-aided facility management.
Challenges & Trends
Prior to the housing crash, the real estate boom was contributing to property management revenue. Property owners opted to outsource property management activities at higher rates to cut down on operational costs and liabilities, reports IBISWorld. The credit crunch strangled the real estate sector, prompting the economic recession of 2007-2009, and industry revenue plummeted.
Commercial real estate values have plunged as much as 40% since 2007, according to research from the Urban Land Institute and PricewaterhouseCoopers. The number of property management companies has also fallen over the same period, prompting consolidation in a bid to boost margins and spread out risk. Consolidation operations have also sought to meet demand in the non-residential market.
Regional Market Share
IBISWorld estimates the US property management sector to be worth $48 billion. There are more than 150,000 property management companies in the US, employing more than 600,000 people. The industry is expected to grow through 2017 due to falling homeownership rates.
Leading enterprises currently operating in the global property management industry include: CB Richard Ellis, Savills in China, Cushman & Wakefield, China Overseas Property Management, Shenzhen Catic Property Management, Jones Lang LaSalle, Colliers International Property, and Before and After.
The global renter base continues to expand due to the falling rate of homeownership in many countries. Lower rates of homeownership fuel property management industry growth as more than 65% of the sector’s revenue is related to residential rental-property management, reports IBISWorld. Economic recovery and falling unemployment rates will see discretionary spending rise, fuelling demand for residential and commercial real estate leases. Property management enterprises will continue to try to compete by offering a full range of services for commercial and residential real estate.
The industry will continue to turn to mergers and acquisitions to benefit from shared risk and to try to increase margins. The industry will continue to benefit from increasing numbers of renters as people opt to lease rather than buy property as the risks of homeownership have been brought to the fore by the housing crisis and the ensuing economic recession.
Leading Industry Associations