News

Half of all higher revenue commercial real estate businesses surveyed believe that financial management has a direct impact on profits, reviewing their financials at least monthly.  This contrasts with fewer than 20 per cent of lower revenue businesses, most of which review their financials a maximum of four times each year.

 Alex Warian, Head of Commercial Real Estate segment at Macquarie Relationship Banking, said that keeping a close eye on the financials of a business is a simple step that can be the difference between a good year and a great year. 

“Good financial management is the cornerstone of all successful businesses.  By implementing regular financial reviews, a business is able to keep in tune with the different factors at play that are impacting costs and revenue, identify patterns and be responsive in terms of adjusting strategic direction as necessary.  Time invested in financial management is time spent wisely,” commented Mr Warian. 

While higher revenue and lower revenue businesses differ in their approach to financial management, there is agreement across the commercial real estate industry on the importance of relationships, service and people.

The top three contributors to profit across the industry are maintaining and developing client relationships (76 per cent), retaining quality staff (74 per cent) and excellent client service (63 per cent). 

Only five per cent of all commercial real estate businesses indicate that they compete on price, which places a greater emphasis on ensuring differentiation through service experience and people.  

Mr Warian said that businesses were recognising this need for differentiation through their focus on growing and developing their team.

Two thirds of all commercial real estate businesses are planning to recruit new staff during the 2011 calendar year, and what is particularly great to see is that more than one third also intend to invest in their current teams, improving skills and experience.

 "However, despite this clear focus on staff, 15 per cent of lower revenue businesses do not believe there is a need to focus on HR practices.  This contrasts with the higher revenue businesses, all of which recognise the importance of HR.  With so many firms intending to recruit, those with little focus on HR may find themselves losing the top candidates to those with clear HR policies and practices,” added Mr Warian. 

To find out more about Macquarie Relationships Banking’s 2011 Commercial Real Estate Best Practice Benchmarking survey please contact 1800 147 479 to speak with a Macquarie Relationship Manager in your region, or visit macquarie.com.au/commercialrealestate.

Over the past few years, the real estate industry has become increasingly more competitive amid the backdrop of a turbulent economic environment. At the same time, the pace of technological change continues to press the industry. As a banker, one of the biggest changes we have noticed with our real estate clients is the majority of our conversations used to be about funding and structuring. But as property management has become a key financial contributor to the overall profitability of many real estate businesses, more and more clients want to talk to us about how they can make their tenant  payment processes as efficient as possible, and what we can do to assist them.

 The businesses that are doing this well have already embraced the technologies available and are using them extensively; employing seamless end to end payment systems in property management and improving their efficiencies and hence, profitability, as a result.

We are seeing the better businesses looking to automate part or all of their administration processing so they can free up their teams to focus on revenue generating activities. 

As an example, to assist our clients in improving their efficiency, we developed Macquarie Batch Payments and have rolled it out to a number of our clients over the past couple of months. 

Essentially the technology can usually be embedded into a commercial real estate agent’s existing property management software. This allows the property manager to pay bills via BPAY directly from their property management software and to pay all those bills that can’t be covered by direct credit. Without Batch Payments a property manager would have to make these payments via cheque (which we estimate costs, in terms of administration processing costs, at least $5 per cheque or possibly a lot more) or, if the bills are paid online the property manager would have to enter them into the property management software and then use their bank’s website to make the actual payment. 

The advantage of Macquarie Batch Payments is that you enter the payment into your property management system once and initiate the payment at the same time from the same place. This eliminates the need to draw cheques or double key these hundreds, possibly thousands of transactions each month. Transactions are then automatically reconciled into the property management software.  This is a considerable time and cost saving for businesses and improves efficiency on multiple fronts. 

Our clients who are processing hundreds of transactions per month tell us the real benefit to them is that the process is simple, efficient, reduces manual error and frees up their resources to focus on higher value tasks.

The paperless office is something that we have all heard about for a long time but it is starting to become more of a reality now that there are tailored technology solutions in place which are affordable and easy to implement. Document management is becoming more common throughout the industry and the next logical step for businesses is to automate their administration processes using workflow. A number of forward looking businesses are already doing this. 

As a bank, we are working closely with our clients to make tenant payments processes as streamlined, efficient and cost effective as possible because we understand how important efficiency is to our clients’ profitability. The ‘nirvana’ of the paperless offices might still seem like a long way off when you are opening hundreds of paper bills each month but the good news is that we can see nirvana faintly on the horizon. 

Alex Warian is Head of Commercial Real Estate for Macquarie Bank Limited’s Macquarie Relationship Banking Division, providing Banking and Financial solutions to residential and commercial agencies.