As reported by the Australian Bureau of Statistics, Queensland has seen approximately 14,000 Australians migrate from interstate in the 2nd & 3rd quarter of 2020 and there is no sign of a slowdown in interstate migration to Queensland. The growth in Queensland residents has created a high demand for homes. Either by owner occupiers or by long-term residential tenants. This has driven average weekly rentals and property prices sky high. Low interest rates and the desire for interstate migrants to work from home in Queensland has fuelled emotive buying tactics which put further pressure on the tight rental market.
At the height of the pandemic, many Management & Letting Rights operators wisely converted some of their apartments under management from short-term letting to long-term letting which was intended to provide a short-term fix to ensure that rental revenue was continuing to be generated for the unit owner investor albeit at a reduced rate of return during a tough trading period.
Readers may recall that at several stages during the height of the pandemic taking a holiday was banned. These disruptions to normal trading patterns for short term accommodation providers occurred virtually overnight.
These former short-term rental apartments posed a new challenge for onsite letting agents. Property owners who previously experienced high returns are now asking to return their properties from the long-term market as the demand for leisure accommodation returns. This currently presents an issue to the property owner as many of their long-term residential arrangements are still locked away for an intervening period via a residential rental arrangement and as such would need to await the expiry of the lease thus reducing the flexibility of the arrangement for both the Resident Manager and the unit owner investor client.
Lately and much to our collective relief, operators throughout North Queensland and parts of the Gold Coast have been enjoying a surge in demand for holiday accommodation after the release of the Governments subsidised flight and travel voucher initiatives. Other areas such as the Sunshine Coast and the Whitsundays have been going gangbusters for a while.
Now there is such a high level of pent-up demand for leisure accommodation across all areas that there is a severe staff shortage …. what a dilemma !
ARAMA took time throughout covid to remind members that the downturn in travel and tourism would be temporary. Cycles often are. The temptation to offer long term rental agreements would ultimately prove difficult to reverse and result in lower returns when it was inevitable that at some point holiday travel would boom.
The other problem was that once the apartment was identified as more suitable for long term occupation the owner occupiers wanted to stay there… forever !
The increase in Queensland’s population has not only led to the shift away from short-term letting to long-term letting but also to the more recent trend of many investor owners selling up to owner occupiers and at a significant premium, in some cases drastically reducing the size of the letting pool for onsite letting agents. The big winners have been those Resident Managers who have seen the trends emerging and flexibly adapted their operations to the everchanging role which involves short stay accommodation converting to long stay accommodation and then back to short stay while at the same time becoming actively involved in the real estate buying and selling frenzy by working collaboratively with their unit owner clients and potential clients to satisfy their need to sell or buy or obtain a steady rental return. These are the operators who have had the foresight to obtain a full real estate sales license and work collaboratively with others including outside sales agents to ensure that as many properties as possible are sold to investors and therefore remain in the letting pool.
Resident Managers face new challenges in the recovery from Covid-19. ARAMA constantly urges operators to seek expert specialised advice, support and guidance – there is plenty out there and this is where ARAMA can really help you find the right connection to help you and your business make the adjustment necessary to succeed.
The business of Management and Letting Rights provides Resident Managers and their unit owner clients with flexibility to manage their rentals on a short-term basis or on a long term basis or with a mixture of both all of which helps to help provide a continuation of cash flow and a sustainable operational profit. This business also provides an ideal opportunity to ride the real estate boom and get involved in the sales process to increase profits or to help defend and protect your letting pool.
The key to success for modern Resident Managers is to realise that they are not just onsite caretaking service providers or holiday complex operators but that they are also real estate agents who have an ideal opportunity to grow sustainable profit by riding the real estate boom and bending and flexing to the changing trends as they occur. By limiting your options, you may be limiting your success.