- Is there a way to boost our EBITDA (NOI)?
- Is it possible to increase the price per sqm, bring operating expenses down, reduce vacancy rates and create new revenue streams?
- What services are “new” tenants looking for?
- Which target audience would be prepared to pay more, and why?
During the round table discussion at the Residential Intelligence Meet up – held on 24 February 2020 – CBRE PropTech and the top tech and innovation players in Spain debated these questions, along with the latest challenges and opportunities for the sector.
The aim of the round table was to discuss the most important issues for owners, investors, Socimis and servicers operating on the residential lettings market – focusing particularly on raising NOI. i.e.: increasing rents, lowering vacancy rates, reducing OpEx and creating new revenue streams. The areas for improvement were analysed by understanding the rental lifecycle to include data-acquisition-management-smart property and special services, since these aspects are all vital for driving up NOI. The startups at the event specialise in each of these phases of the cycle, and as such were able to give us an insight into how they can help investors.
Tomás Sanchez, Director of Residential Intelligence at CBRE Spain, along with Maria Varela Apraiz from Spotahome, Daniel Batlle from Alfred Smart Systems, Adrián Miranda from Multihelpers and Jose Ramón Sánchez Ameijeiras from Transparent Intelligence explained, from their point of view, the benefits that digitalisation can have for owners in the residential sector (funds, Socimis, developers, etc).
1. Increase rents and maximise occupancy
The Transparent Intelligence system allows owners to analyse tenant reviews in order to discover what they value the most, and adjust prices depending on unforeseen variations in demand.
“The data allows you to make decisions based on the average occupancy of a given area. For example, Porto seems like a major tourist destination, yet due to oversupply, it has a relatively low average occupancy rate compared to L’Hospitalet in Barcelona, which has the highest rate in Catalonia”, said Jose Ramón Sánchez Ameijeiras.
Maria Varela Apraiz focuses on finding which type of rental is the most profitable (short, medium or long-term). People found that there was a gap in the market for medium-term lettings, until Spotahome arrived on the scene.
For Alfred Smart Systems, digitalisation helps them to offer tenants a better product and service, and this in turn allows them to increase rents.
“Digitalising a property can have an impact on the asking price at the end of each year, as buyers will be prepared to pay more for it”, explained Daniel Batlle.
For Multihelpers, an efficient incident management system can help to retain more tenants – as solving issues automatically within a matter of hours and digitally is an additional comfort that some clients would be prepared to pay higher rents for.
2. Reduce OpEx
Tenant rotation results in higher costs, but this can be kept in check and made more efficient by using data, according to Transparent Intelligence. Multihelpers can reduce incident management costs by between 40 and 70%, as it saves on staff and time. For Alfred Smart Systems, access systems and cameras can be used to monitor incident management and provide greater transparency between suppliers and owners, reducing costs. The Spotahome system reduces costs at the acquisition phase, by cutting out agents and providing clients with an automated, digital process.
3. New models
Multihelpers points out that by satisfying growing demand for new complementary services such as food delivery, leisure or mobility, owners will be able to increase rents and even provide a new revenue stream, depending on the type of agreement they are able to reach with suppliers.
The Alfred Smart Systems model allows owners to turn previously unused areas into income-producing spaces. For example, the rooftop of a residential building could be let out for barbecues and parties by simply fitting it out with furniture and equipping it with an automated access system.
4. Challenges facing residential property owners
Property owners will look to revenue management as a way of gaining greater control over rents and the market.
Over the next few years, younger generations are expected to increasingly demand instant solutions via digitalisation, from virtual apartment viewings (Spotahome), and home automation (Alfred Smart Systems) to rapid incident management (Multihelpers).