Remote property management is shaping into a lucrative business
They say some of the best innovations happened during large-scale crises. And throughout history, as humankind navigated challenges like World Wars, the Great Depression, and the Bubonic Plague, innovations were our answer — all born from a sense of urgency and desperation. These innovations changed the course of history. Today, as we navigate the COVID-19 pandemic, and do so with technological aid, we are witnessing a fair share of structural transformations. This is true even in traditionally conservative sectors like real estate.
Tech-enabled property management
Among the real estate verticals witnessing such change is property management, which is now garnering greater attention, due to the pandemic. As travel restrictions were imposed, property managers could not execute their duties on time, leading to friction in services. This “disruption” was a costly affair because property management handles a host of critical functions, including leasing, tenant onboarding, agreement registration, rent management, and property maintenance.
The disruption saw property management companies pivot to digital operations, offering “remote” services. The scale of change is such that “remote property management” has become the primary value proposition of existing firms and new entrants. This development bodes well for all parties involved – owners, tenants, and managers – due to accompanying advantages such as transparency, ease of operations, savings, greater accountability, and timely services. But most importantly, remote property management has come as a godsend for homeowners who reside in a separate country or state.
The business is booming
Let’s consider the Indian real estate ecosystem: The customer base of niche property management companies in India was mostly comprised of NRIs, who couldn’t personally visit the country all the time; for inspections, repairs, tenant vacating and onboarding, etc. Instead, owners could give the power of attorney to property management companies, and rest assured that their assets would be safeguarded. But the pandemic-induced disruptions, and the ensuing increase in digitalization, have changed the equation.
Lately, incumbent digital real estate marketplaces, with large existing customer base and market penetration, have added remote property management services to their offerings. Their competitive price points and existing reputation are drawing customers in large numbers. Real estate marketplace NoBroker’s findings(1) offer some clarity. Among its clients, NRIs account for 40%, institutional owners account for 25%, and the remaining 35% are people staying in a different city or are staying in the same city but prefer hassle-free remote property management services.
In other words, real estate portals are roping in non-NRI clients through full-stacked property management models, creating a new market in the country. And as expected, this development is resulting in new JVs and funding. Recently, leading marketplace Housing.com entered a partnership with Singapore-based Homzhub(2), a property management SaaS startup. Also, community platforms like MyGate are entering the remote property management business, pitching the service to their large, existing customer base. The cost of service is often a nominal percentage of the total transaction, yet sustainable for service providers due to the sheer volume of the market. Many are offering subscription packages too, hoping to engage homeowners for the long term.
Untapped potential in the UAE
In the UAE, even before the pandemic, property management companies had embraced digitalization relatively well. They have since enhanced their “remote” offerings, in line with new expectations. That said, incumbent digital marketplaces like PropertyFinder and Bayut are yet to tap into this segment.
Also, with regulatory bodies like DLD’s Rental Disputes Center creating a robust framework for contracts between homeowners and property management companies, the trust deficit in the segment has been reduced. Taking stock of the opportunities, new entrants like Square Yards are offering property life-cycle services(3) that include assistance in payment collections, builder-buyer agreements, documentation, mortgage disbursements, etc. Such launches could pave the way for healthy competition and better price points for customers. And since the UAE boasts sizable foreign investors in the real estate sector, the market for remote property management is ever-present. This demand is set to increase with local homeowners now preferring remote services too.
