Every week there are new stories about the wonders of internet connectivity and the ‘Internet of Things’.

In residential property management, the advances are making a dramatic difference to people’s lives.

Here are nine ways that the latest mobility and connectivity technology has improved conditions for block managers, leaseholders and residents.

One: Improved property management

Containing a wealth of information on individual properties, property management portals facilitate better communication between block managers and leaseholders and residents, better access to important documents, contact lists for contractors and emergency help lines and much more.

Two: Online tracking

Property managers and resident management directors can log on at any time to check the status of building management issues.

The technology can incorporate an archive of calls, repair activities and contracts so that everyone is consistently aware of what has been done, what needs to be done, and by whom (and what it costs).

Three: One source of the truth

One data and document set throughout the whole property management process can be enabled by superb connectivity. This reduces errors and duplication of effort, resulting in further efficiencies.

Four: Real time inspection information

When property managers visit buildings, they can use their tablets and smartphones to check through issues and inspect for health and safety compliance. As they do so, any action points immediately register with the office, through an online connection, speeding up the process of remedying problems and ensuring that all issues are noted.

Five: Prompt accounting details

Transaction information is available to block managers and directors of residents’ management companies, meaning that issues can be monitored in real time. Service charge expenditure items can be approved and actioned within days.

This means that block managers can stay within agreed budgets more easily, there is greater transparency for everyone in financial transactions and less scope for dispute.

Six: Easier compliance

It is increasingly important to comply with RICS (Royal Institution of Chartered Surveyors) and ARMA (Association of Residential Managing Agents) regulations. Leaseholders today are more aware of block managers’ responsibilities and more prepared to take action against them if they flout these regulations.

New technology enables block managers to maintain a closer eye on compliance and to prepare in advance for issues which need attention, such as health and safety inspections.

Seven: Better communication

A common complaint from leaseholders and tenants is that block managers make too few visits to properties and fail to respond in a timely way to queries. An online property management portal reduces such issues, since it contains answers to many of the queries that would previously require an individual to respond.

Sending out regular email correspondence means that tenants and leaseholders feel informed and in contact with block managers, even if the frequency of physical visits has not changed.

Higher frequency and better quality communication also acts as a powerful marketing tool for block managers. New work may emerge as tenants and leaseholders recommend block managers to their peers.

Eight: Streamline administration

When block managers adopt comprehensive and up-to-date property management software, they can integrate their diaries, workflow, correspondence and financial transactions into one system, with multiple benefits to the business: speed of response, transparency of information and lower costs. Far more administration can be achieved in less time – sending out service charge reminders for example.

Nine: Enhanced corporate branding

With smarter, faster and more efficient operations thanks to online property management software, block management companies can present a more professional image to the market, leading to a higher probability of new business referrals.

Employees who would previously have spent hours mailing service charge reminders or other correspondence can now concentrate on winning new business. Potential clients can see the scope and efficiency of the business by looking online.

A smart property management system can help to increase turnover, reduce costs and enable business growth, as block managers demonstrate their increased efficiency and professionalism.

 

Corporate real estate service providers face an ongoing challenge to ensure they manage clients’ property portfolios effectively.

As well as running the day-to-day operations and ensuring essential pieces of equipment remain safe and functional, providers need to remain up to speed on the more strategic elements. Knowing when leases or contracts expire can help shape key decisions around the disposal or use of buildings, while responsibilities around rent or rate payments, insurance premiums and facilities management contractors must all be met.

The ability to easily identify and receive alerts for important dates is vital, as is being able to demonstrate the total cost of a portfolio, including any anticipated future expenses.

Effective management reporting will also mean data can be compared against key performance indicators, helping to ensure costs do not spiral out of control and allowing clients to hone in on areas that are of particular interest to them.

Keeping on top of all this across multiple buildings and clients mean an effective technology solution is essential. This is even more relevant than ever, with the disruptive landscape driving companies to evolve; it seems clear tech is now becoming a differentiator in the CRE industry, with large service providers rapidly acquiring software solutions and partnering with tech providers and consultants. So what can service providers do to strengthen their offerings?

Added insight

The use of big data and the Internet of Things means there is now more information available than ever before, with smart devices able to monitor usage of particular areas of buildings. That insight can then be fed back to those who are tasked with making decisions around both the use of space and the design of buildings. This can be compared with historic usage, helping to identify areas of a building which are overcrowded or potential rooms or floors where there is unused capacity, as well as giving an indication of likely future usage.

When combined with other tools such as CAD packages, such technology can help service providers and their clients ensure more efficient use of space and view information around tenants and any vacancies. Some packages can even work with geographic information systems to help identify potential sites for future expansion, highlighting issues such as planning requirements, population density and the presence of other businesses operating in the area.

This kind of insight means service providers can not only provide clients with an accurate assessment of their current portfolio and any areas of waste or opportunities for efficiencies, but can also present potential solutions.

Sourcing software

The challenge for service providers is to find such capability from a software package. For larger providers with considerable in-house IT departments and big budgets, it may be possible to develop their own system, configured to their needs, as long as they have the capabilities to update this over time as new requirements and functionality emerges. Most service providers, however, will not have this luxury, and will look to external providers to take care of all this for them.

There are a number of other elements to think about when picking a software provider, as well as making sure it has requisite functionality. Being able to integrate with other software is vital. As well as working with the above systems, being able to extract reports to Excel, Word or PDF formats means clients can easily evaluate information and spot trends. The ability to customise reports to specific requirements is also something to consider, allowing users to hone in on individual, sector or country details.

Knowledge is power

There are obvious benefits to both service providers and clients of having such capabilities. For clients, having easy – and sharable – access to such information will help them make the right decisions when it comes to space usage in a building and identify any potential opportunities that may exist to rationalize a portfolio or to add to their property footprint, perhaps with new offices, shops or distribution units.

Knowing such information is available and being monitored carefully by a specialist provider will give in-house property professionals or heads of facilities/estate planning the confidence to focus on their own role, and can also help elevate their own position and that of the function internally.

Standing out

For service providers, being able to offer this kind of intelligence can help to retain existing clients and win new ones, by offering something that competitors may be unable to. Being able to explain the business benefits of such a package is vital, and service providers that do this will be able to demonstrate how they can help clients with strategic insight into their entire property portfolio as well as managing the daily operational activities. In such a fast-moving and competitive landscape, such technology credentials are essential.

“The system should be accessible to multiple users and stakeholders.”

The Private Residential Sector (PRS) covers a broad spectrum of rental property. If you’re developing Build-to-Rent or whole block ownership schemes, known in some parts of the world as multi-family housing, you’re responsible for the entire property lifecycle, from developing a building, to attracting residents and processing their tenancy arrangements to the long-term financial and asset management of developments.

This means that touchpoints across the property lifecycle can end up being disconnected, unless an end-to-end PRS software solution is employed to link all stages of the resident journey, including property management, lettings management and a resident engagement system.

In this blog post, we consider how property investors and their management teams who are looking to move into the Build-to-Rent sector for the first time can avoid the problems associated with disparate data sources – including duplication of effort and inaccuracies. As a result, they can deliver exceptional benefits to customers and improve communication to all areas of the business throughout the building lifecycle.

The Development Process

All Build-to-Rent schemes require the right system architecture. This might include CCTV, networks, communications, parking, door entry, AV hardware, key management, IT hardware, telephony, in-flat broadband, TV packages and public Wi-Fi.

Importantly, there needs to be integration from the outset between this technology and the core property management system used to manage and maintain the asset long term; this integration is crucial to enabling automation of operational processes, gaining evidence at all stages, depth and breadth of reporting, and maintaining security of systems and data protection.

The Lettings Management Process

The lettings management process starts with attracting and securing residents, including marketing properties via a range of channels. This is followed by “on-boarding” – smoothing the tenancy processes and ensuring legal compliance. A rental solution plays a key part in this first stage, enabling automated processes and resident matching.

An add-on resident portal, fully integrated with the property management system, will help in delivering an improved level of customer service, offering more value to residents with amenity bookings, add-on services and local targeted marketing. The final link in the interconnected chain is the resident replacement and move out process.

The longer term life of the asset

Once the residents are set up in their new home, a smooth link with property management software enables efficient rent collection and arrears chasing, as well as effective facilities management, ensuring the reasons for any resident dissatisfaction are quickly identified and dealt with and the property is well maintained.

A property management system should be the single central source and location within the build-to-rent software solution, holding all key data and documents, such as rental agreements, inventories, and those relating to due diligence on residents.

The system will also enable agents to automate time-consuming administrative processes and reduce the costs and complexities associated with managing properties. It should be accessible to multiple users and stakeholders, with custom access levels depending on role and responsibilities.

The connected solutions approach can be taken a stage further still, by integrating your systems with those of your suppliers; this allows procurement and settlement to be accelerated. On top of the practical efficiency gains, potential residents are attracted by the thought of connected and smart buildings with app-controlled environments, where the infrastructure is scalable for future technology developments.

Ultimately, by linking data points within a core property management system, investors will benefit from a sophisticated PRS software solution to enhance effectiveness, service and profitability. If you are new to PRS – you may already have a very slick property management process in pace already (in-house, outsourced or a combination) and it may just be about adding technology components to this.

 

The corporate real estate sector is changing fast, as a result of changes in the way people work, the introduction of new technologies and the ongoing pressure on businesses to save costs wherever possible.

According to the Live Work Play 2016 report by CBRE, 78% see workplace quality as important when choosing an employer, and 69% will trade other benefits for better workspace.

Offices, for instance, now include a number of areas which simply weren’t on the radar of property professional or employees a few years ago, with breakout or collaboration areas, cafés and even gyms offered as a business benefit.

Additionally, open-plan offices are now the norm and some businesses encourage a culture of flexible working, desk-sharing and remote working. This means many do not have capacity for all staff should they all be in the office at once.

Added responsibility

For CRE professionals and service providers, this constant change creates additional responsibilities and challenges. The trend towards shorter lease periods mean it is essential that these are closely monitored, both to ensure payments and renewals are made on time but also to help clients understand their options as their own business demands change.

Technical assistance

Having access to information around lease data and property costs is therefore essential, as is the ability to compare these over time, against previous figures and key performance indicators. It’s important those tasked with looking after clients’ portfolios have access to the technology that can help generate such insight.

However, an industry wide survey by Qube Global Software shows that 75% of real estate professionals believe themselves to be at the early stages of their technology journey, with only 5% of businesses currently seeing themselves as tech pacesetters.

But lack of investment in this area means that companies are missing out on critical information; nowadays, technology can combine such insight with data from other systems such as CAD packages, giving those overseeing property portfolios the opportunity to overlay such information on the footprint of a property or shopping venue, making it easier to identify any areas which could potentially be freed up or where there could be improvements.

Taken one stage further, technology can also help to identify potential solutions as well as highlight problems. Take a retailer with multiple branches which is looking to move into bigger premises or open new outlets to meet customer need. The use of geographic information systems could help identify areas where there are no major competitors yet a significant local population, and even provide information on planning permissions that would be required for individual sites.

Mutual benefits

Such capability goes far beyond the day-to-day requirements around making sure premises are maintained and rent is paid – important though these are – but can give the kind of strategic insight businesses need to make critical decisions about both their own property portfolio and the wider business strategy.

This is critical in an industry where transparency is paramount; Qube Global Software’s survey also found that the sharing of information is a key concern for real estate professionals across the board, with a third of occupiers finding it difficult to justify and understand information supplied to them by service providers.

Service providers, therefore, can use technology to their advantage, allowing clients to draw on an unprecedented level of insight and to drill down into their own unique requirements. Those which can do this stand to gain from increased customer retention and new business acquisition, as well as cementing their reputation in a competitive marketplace.

While finance has a key duty to ensure compliance with accounting standards, reforms to the rules on leasing will bring real estate and its property management technology into the picture.

Who should take responsibility for leading the response to the new accounting standards that the International Accounting Standards Board and the Financial Accounting Standards Board will introduce with effect from January 2019?

On the one hand, accounting standards are traditionally the preserve of the finance function; on the other, these particular reforms are all about bringing the value of lease obligations onto the balance sheets of publicly-listed companies; since property assets will form the largest part of those obligations for many businesses, real estate clearly has a significant role to play too.

In reality, of course, this isn’t a binary question. Both finance and real estate are going to be involved in ensuring compliance with IFRS 16 and Topic 842 once they come into effect, and in managing the impact of the standards on an ongoing basis thereafter.

However, it is important that both functions recognise the important role each other has to play – and that they work collaboratively on the business’s response to the reforms as equal partners. That may represent a new way of operating at many companies, where real estate will traditionally have taken its lead from finance.

The good news is that finance directors are increasingly getting to grip with the basic impacts on their businesses of the reforms – particularly the headline changes to key financial metrics such as debt and profitability that may occur following the adoption of the new standards.

Equally, however, real estate directors bring specialist knowledge to the response to IFRS 16 and Topic 842. They also have the key tools required to do the detailed work now needed – their property management technology, whether existing or new, is the best route to identifying which leases are relevant to the new standards, extracting the key data from these leases, and also modelling future leases for their potential impact on the balance sheet.

The division of labour and responsibility between real estate and finance is therefore going to be even-handed. Certainly, checklist guidance from leading accountants suggests a number of key roles for both functions: for real estate, the challenges include identifying all property leases, checking systems are capturing the right information and monitoring it on an ongoing basis, and reconsidering lease strategy in the light of the reforms; for finance, key tasks will include considering exemptions and transitional reliefs, modelling the impact on financial results and statements, and communicating these impacts to stakeholders.

This is not an exhaustive list for either function by any means. But the important part to grasp is that finance and real estate will need to work hand-in-hand in the face of these reforms. The partnership approach will ensure the business benefits from both functions expertise and experience during the transition and on an ongoing basis.

Moreover, ensuring your business’s property management technology is capable of generating the data required is going to be an essential part of that split; the danger otherwise is that finance misses the opportunity to maximise value and minimise impact by trying to manage the process through its existing (but more limited) enterprise resource planning systems.

Takeaways:

• New accounting standards that come into force in 2019 will require companies to record the value of real estate leases on their balance sheets
• Real estate and finance need to take joint responsibility for managing the response to this change
• Property management technology holds the key to a successful partnership between real estate and finance

As a residential property manager, what are the fundamental factors that persuade your clients – whether leaseholders or committees – to recommend you?

The changing face of recommendation

New business development in the market has always been highly driven by recommendation, as targeting leaseholders and committees is a hard task to do directly.

However, the way that recommendations are made today is changing. In addition to meeting at networking events, leaseholders and tenants share information via online forums such as LinkedIn, Twitter and industry-specific websites.

It is common sense that in this digital age, prospects will look positively upon businesses – including block management companies – that use IT efficiently and effectively.

This could be:

• The speed and quality of your responses to queries and issues such as maintenance problems.
• Accurate service charges, forecast correctly, which can be paid online in an easy and convenient way.
• The professionalism and efficiency of your service and of the contractors you hire, which assures them that their property is in good hands.
• The transparency and facility of your online property management portal, which gives them up-to-date information and transaction details.
• Regular and frequent communication and updates on important issues, so that they feel well-informed and that you are responsive and engaged.

Each of these areas can best be achieved through smart, comprehensive property management software.

So how should block managers go about selecting such technology? How can they judge what will best enable them to achieve the business growth they seek?

Here are some factors to bear in mind:

• Look at what systems other block managers have adopted. Consider the size of their operations, the type of clients they work with and the type of properties they handle.
• Consider buying a property management software package that has proved itself a market leader, with a strong reputation within the industry. Look for cases studies and seek references.
• Calculate how much time and resources you can save, which can be reinvested in new business development. A great software package should present significant opportunities to market your services more widely.
• Find out about the business insights that a property management system can offer. For example, it may allow you to view your property data to produce detailed forecasts and reports.
• Consider the online and self-service functionality of a property management system. New clients will place a high value on this aspect: it improves communication, speed of response and data integration while saving money and time.
• Seek out a system that can offer you the ability to market to both leaseholders and residents, driving revenue from all building users.
• Prioritise a supplier with a well-worked out mobile and apps strategy, together with Software as a Service (SaaS). This shows that you are at the forefront in adopting new technology, to the benefit of your clients.
• Choose a system that can allow high levels of collaboration between all stakeholders in the property management process, driving further efficiencies through the whole supply chain.
• Look for a property management software provider with strong training and support. As a block manager, your employees may not be IT experts, so you want them to gain good understanding and use of software quickly, and be able to help your clients to use it.

So, in summary, to achieve optimum results and to grow your business, it is crucial to have demonstrable technology that supports the following areas:

• Accurate and well managed service charges.
• Excellent relations with contractors, together with fast response times.
• Frequent and full communications to all stakeholders.
• Efficient administration and good use of resources.
• Compliance with RICS and ARMA regulations, along with an awareness of current and forthcoming legislation.

The more work you are able to take on, the better able you will be to pitch to new clients. By demonstrating your ability to handle higher volumes of work, you can also stress the benefits to clients: you can negotiate discounts from contractors and suppliers, and achieve other economies of scale in your own administration.

It’s the ultimate good recommendation: hire this block manager and get great service. Few people would argue with that.

 

New lease accounting changes will prompt many more businesses to embrace evolving property management technology

The countdown has begun, but is your business ready for new lease accounting changes that will require all publicly-listed companies to account for the value of their leasing obligations on their balance sheets? If not, time is running out – the new standards come into force on 1 January 2019 – and new property management technology trends, such as the move towards artificial intelligence, may be your best hope of complying.

The regulation, contained in the IFRS 16 regulation (or in Topic 842 in the US), means any business that leases real estate, as well as plant and machinery, will need to identify every single lease they’ve signed, check whether it is within the scope of the new rules (some short-term leases are excluded), and assess its value so that the obligation can be included in its balance sheet.

Vast numbers of businesses will have to respond to this reform. And while industries such as retail, leisure and travel, which hold large numbers of property leases on disparate sites, will be particularly affected, no company can afford to rest easily. One in two publicly-listed companies around the world will be affected by the new standards according to the International Accounting Standards Board and the US’s Financial Accounting Standards Board, which are together driving the changes.

The effects could be dramatic, warn analysts and accountants. At the supermarket group Tesco, for example, some analysts believe the company’s debt will double to almost £18bn under the new rules.

However, it’s not just the end result that businesses will have to deal with. Getting there is likely to be onerous too – many large companies are sitting on vast numbers of leases, covering real estate in markets all around the world and often held in disparate locations or by a large number of subsidiary companies. All of these leases must now be found and interrogated in order for businesses to make compliant accounting submissions from 2019 onwards.

Conducting all of that work manually will be time-consuming, burdensome and expensive for many businesses, diverting resources that could otherwise be employed on supporting the company in its growth objectives. For that reason, many companies are now exploring technology-driven solutions as they work out how to respond to the lease accounting challenge.

In particular, property management technology enthusiasts are focusing on artificial intelligence (AI) and deep learning tools, which look very promising in the context of the work required. The idea is that these tools will employ trained algorithms that will read each lease held by the company, identify and extract all of the data potentially required for inclusion on the balance sheet, and provide a decision on which of this data should be included under the terms of the new standards.

In other words, AI has the potential to automate the process of IFRS 16 compliance – and to do so more efficiently and accurately over time, as the system learns from the increasing amount of data it has processed. Some manual intervention may still be required – to check the system is delivering the right data, for example – but this need should diminish over time.

AI tools of this sort can also identify missing data that isn’t included in a lease, but which the company needs to comply with the standards. This can feed through into processes for obtaining the information required. The tools can also interrogate the lease documents to check they’re consistent and accurate – as Emilio Matthaei points out in one recent blog, this might help businesses establish that a lease which mentions an amendment, for example, actually includes this amendment on file.

In short, for large companies with many leases, property management technology such as AI tools may now offer the best possible chance of getting accounting right before IFRS 16 comes into force – not to mention managing the burden of delivering compliance.   Takeaways:

• New lease accounting changes that come into force in 2019 will require companies to record the value of real estate leases on their balance sheets
• Complying with the lease accounting changes will require companies to identify and extract relevant information from every single lease document they hold
• Artificial intelligence technologies can help to automate the compliance process
• Property management technology can free up your staff for value-adding work

For more information on our lease accounting solution, please visit the IFRS 16 page.

New accounting standards will see real estate leases take on an unprecedented significance for company finances, shining a spotlight on the business’s property management technology

For real estate professionals negotiating and signing new leases, life is about to get significantly more complicated. From January 2019, the introduction by the International Accounting Standards Board of IFRS 16, a new accounting standard focused on ensuring the value of leasing obligations is reported on publicly-listed companies’ balance sheets, poses all sorts of challenges.

The rules are likely to see the value of companies’ liabilities and gearing increase significantly according to analysis. That will apply both at the moment of transition, as existing leases are reported on the balance sheet for the first time, but also on a continuing basis with all new leases signed thereafter coming under the new rules.

For the real estate functions of large businesses, therefore, IFRS 16 represents a watershed moment that they may not be equipped to deal with. Businesses without property management technology that includes modules designed to cope with the new rules are likely to find themselves in particular difficulty.

The challenge is twofold. Finance departments have already started putting pressure on their real estate colleagues to identify all leases covered by the new rules and to begin extracting the data required under IFRS 16; for many companies that will be a major undertaking. But just as daunting is the long-term implication of the reforms – now that leases will have such a material effect on the company’s publicly stated financial standing, it will be crucial to consider this issue when entering into new lease agreements.

In other words, real estate functions are going to have to become more strategic in the way they approach new leases; the impact of every lease covered by IFRS 16 will need to be considered in this context. The real estate function may even find that its preferred approach to property leases is no longer in the best interests of the business – and that it therefore needs to change tack in order to optimise future lease design.

To make such decisions, real estate and finance will need to work more closely than in the past – and to exploit property management technology that is capable of modelling the potential balance sheet effects of each new lease under consideration; such models will be the key to identifying the best way to proceed – and therefore to informing the negotiating strategy and priorities for real estate as it discusses new agreements with landlords and freeholders.

If that sounds intimidating, bear in mind too that for many international companies, this modelling process will also have to be able to cope with the different approach taken to lease accounting by the Financial Accounting Standards Board in the US. Its Topic 842 standard, which takes effect around the same time as IFRS 16, is based on identical principles, but works differently from a technical perspective. Businesses covered by this standard as well as IFRS 16 therefore need property management technology that is able to model on the basis of both systems.

The ideal approach will be one that is pursued jointly by finance and real estate, given their respective experience and expertise. Where either function seeks to act in isolation, they risk missing crucial nuances that may have a major impact given that globally, IFRS 16 and Topic 842 are expected to add $2.8trn worth of assets to company balance sheets.

Takeaways:

• New accounting standards that come into force in 2019 will require companies to record the value of real estate leases on their balance sheets
• The effect of these standards will require the real estate function to think more strategically about lease design in future
• Real estate must work in close partnership with finance to manage compliance and deliver strategic goals

For more information on our lease accounting solution, please visit the IFRS 16 page.