Catering for the Rental Market Post-Lockdown
Over the past few months, the lockdown has allowed for the natural world to begin to heal itself of the harm that has been caused to it by us. Is this creating a better place for us? Maybe, yes. But should we thank COVID-19? Definitely not. Since its outbreak, COVID-19 has affected all of our lives, far more so than any other disease in living memory. Although it has helped to benefit our environment, we shouldn't have had to wait for a disaster such as COVID to achieve this, we could have been more proactive towards planet earth all along.
With this in mind, we need to realise that we don't have to wait for COVID-19 to adopt better options to operate efficiently in the rental market.
Over the last few years, we have been talking about the need for digital solutions for real estate agents, landlords, and property management companies. Although there was always a positive outlook coming from real estate stakeholders regarding the need for digital solutions, when we looked at the adoption rate, it wasn't exciting.
COVID-19 came as a big shock and forced people across the world to stay home. This surely interrupted a lot of human dependent activities, not least manual processes in rental management activities.
A report of Macquarie, KPMG, said there is room to improve the real estate processes by 25-45% with existing automations available. This comes from Australia where over 65% of rental properties are managed by professionals managers.
The adoption of digital technology for automation is way low in emerging markets like India, other parts of South Asia, and South American countries.
Lockdown has forced people to explore how Realtors can still run the show while sitting at home. Many Realtors who were highly manually driven have come back asking for digital solutions during the lockdown in India. This is not unusual and has been seen across many countries, as reported by McKinsey.
McKinsey's survey report clearly shows that digital enablement has been 2X during COVID-19, and that when we talk about the rental market and its areas of operations, there are huge opportunities to increase digital enablement.
As a real estate agent, if you are able to show properties to potential tenants using 3D tours during lockdown, you can also capitalize on this post-pandemic. Similarly, there will be the adoption of digital solutions in different areas of rental management.
There will be a significant emphasis on reducing the dependencies to work from the office. Before lockdown, we emphasized to our potential customers the need to reduce the on-premises server/system usages. During the lockdown, they had to carry servers to homes with limited users accessing business-critical information. To mention a few, business-as-usual activities were affected in the way rental companies carried-out:
- Invoices being shared to their customers
- Accommodating rental wave-offs etc.
The need for a digital solution by rental property managers is not confined to serving their customers only during the lockdown, but most of them will be valid post lockdown as well. Many companies will adopt and those who will not adopt may lose out on the market share.
We are sure about this happening based on both our experience and because this is also justified in McKensey's report. As stated in the McKinsey survey, self-service solutions will evolve to the new level as consistency, customer personalized experience, and convenience will matter a lot. The below statement from the report emphasizes the need for enabling your rental customers (Landlords & Tenants) with digital experience.
Results in our 2019 survey showed that those suppliers
who provide outstanding digital experiences to their buyers are
more than twice as likely to be chosen as a primary supplier
than those who provide poor experiences, and about 70 percent
more likely than those providing only fair ones
So, digital solutions are going to be the differentiator to start with but will also be fundamental business requirements for rental property managers. Digital solutions offer various benefits when they fit the business well.
But many of the potential customers had below-mentioned challenges to overcome:
- Impact to Business-As-Usual: Many companies operating in the rental space like to adopt digital solutions, but because of the business-as-usual dependencies, businesses don't give enough bandwidth to evaluate the to-be solutions. There will be a transition period, hence, if organizations need to catch-up and stay ahead in business, then there is no other way than exploring and adopting new norms of business. It is a fact that Businesses need technologies and technologies have no purpose unless they solve real business problems.
- Fear of change: Certain organizations have been operating in their traditional way of managing rentals for a couple of decades and they fear making changes to the way they run their business. Not every time we embrace change, it works. But embracing changes with structured and proven ways will reduce cost, possibilities of failure, and sets a gateway for growth. With the phase of evolutions happening in the rental market, staying away from digital disruptions may be hard to survive.
- Capacity building: Recently, Dev Gadhvi,
author of the book
80% Mindset 20% Skills, posted on his social media about the importance of
Capacity Building. It is so relevant. If we are not ready for the scale with our mindset, technology, and people, we will not be able to execute when there are huge business opportunities to be grabbed. Just like the way Zoom capitalized during this lockdown.
- Market dynamics: Over the last couple of decades, the focus on rentals has been in big cities where the majority of the market exists and is growing. Of late, people have been preferring to ditch city life in exchange for a more peaceful countryside life with better affordability, fewer travel hassles, and other lifestyle reasons. While the lockdown has now forced many people to work from home, many technology companies have found it as a fortunate situation to reduce huge operational/infrastructure costs and are even experiencing better productivity. While commercial office space is taking a hit, maybe it is time for the rental market to be distributed among smaller cities. Before lockdown, many rental property management companies thought such structured rental businesses and digital solutions were for bigger cities because of the market size but what we have now seen is that market dynamics are changing sooner than we had anticipated.
We need to overcome these challenges and see the trends more actively than ever.
Rental property management is far more complex by its nature than the real estate sales brokerage business. Even though rental management provides stable revenue compared to the brokerage business, it was less valued and less prioritized. During lockdown, we haven't seen many open houses and auctions happening, and many real estate players are looking at rental property management as a means to strive through this tide of tough market conditions as rent roll provides stable revenue and covers a very good portion of fixed business cost.
It is not the strongest or the most intelligent who will
survive but those who can best manage change.
― Leon C. Megginson
With the way still pandemic is going around, managing change will be ongoing and intense.
Rental Realtors are at the juncture to manage the changes efficiently and proactively. It is very important and possible.link : https://www.unissu.com/proptech-resources/catering-for-the-rental-market-post-lockdown