Management Rights update for November 2024.
Red10 Finance overview of the current management rights industry is based on market research our own data and that of industry professionals.
The Management Rights (MR) market in Australia shows a mix of strong interest and evolving challenges, particularly due to legislative shifts and high demand in coastal areas like the Gold and Sunshine Coasts. Investment demand has remained consistent, especially from syndicates and institutional investors targeting larger properties for stability and predictable returns. However, financing and body corporate processes have extended settlement times, often now ranging from 4 to 6 months. This delay is largely due to increased scrutiny from body corporates, especially if previous relationships with MR operators have been challenging.
The MR market has also seen a regional shift with a rise in holiday and short-stay MR interest in Cairns and other popular tourist spots. Price points between $1.5 million and $3 million are particularly attractive for small investors, while syndicates often target properties above this range. However, as more properties are acquired for owner-occupancy, particularly in Queensland, MR letting pools have started to decline. This transition is largely fueled by interstate migration, which has increased housing demand, impacting MR availability and occupancy.
Consistent Investment Demand: The MR market continues to attract both individual and institutional investors, especially in desirable areas such as the Gold Coast, due to the stable, predictable returns it offers
High Demand in Coastal Regions: Areas like the Sunshine Coast and Cairns are witnessing increased interest in holiday and short-stay MR assets, spurred by strong tourism and local population growth
Rising Market Value: MR valuations in Queensland are holding strong despite regulatory and occupancy shifts, maintaining a positive outlook for investors seeking long-term gains
Syndicate and Institutional Investment Growth: Larger properties are appealing to syndicates and institutional investors, which is driving demand and value for properties above $3 million
Appealing Price Points for Small Investors: Properties priced between $1.5 million and $3 million continue to attract smaller investors, providing accessible entry points in the MR market
The management rights (MR) market in Australia is seeing some interesting trends in multipliers and sales times as we near the end of 2024. Multipliers are averaging around 4 to 6+ times net income, particularly in high-demand areas like Brisbane and the Gold Coast. Queensland still holds strong appeal due to its established tourism market, drawing higher multipliers compared to less tourism-centric states. The permanent market is still very buoyant too as is the caretaking only businesses with no need to buy Real Estate.
Transaction times are stretching longer than in past years, mainly because body corporate committees are scrutinizing new management agreements more carefully. The process of vetting potential managers is slowing things down, especially for mid-market properties. On the other hand, high-quality assets with solid rental pools or minimal maintenance requirements are still moving more quickly, especially when they align well with investor profiles looking for reliable income streams in top locations.
Rising interest rates and selective buyer behavior are also at play, making it a two-speed market. Buyers are cautious, particularly with mid-range properties, while top-tier MRs still draw quick interest and favorable multipliers. Overall, Queensland’s MR market is still performing well, even with longer transaction times and the shifting lending environment.
