The Queensland Rent Roll Market remains strong, with transaction numbers settling, but limited impact on multiples and value being achieved. The Gold Coast market still leads the way, with consistently high multiples being achieved for quality portfolios, even though this market is the one under the most pressure with respect to management fee percentages being achieved.
The Residential Tenancies Authority Annual Report 2023-24 was recently released, with data showing Queensland's rental market has experienced significant changes. Based on new bonds lodged, the median weekly rent across all dwelling types increased from $510 in 2022-23 to $580 in 2023-24, representing a 13.73% increase. This follows a similar 13.3% increase from 2021-22 to 2022-23.
Impact on Property Management Fees
These high annual increases in median weekly rents across Queensland have seen Property managers in many regions more willing to accept a lower management fee to obtain new management. Despite reduced management fees, the annual management fee income earned per property remains steady or even increases due to higher rental values.
Regional Variations
The Southeast corner, particularly the Gold Coast, faces the most downward pressure on management fees. This pressure is likely due to increased investors from NSW and VIC, where management fees are typically 2-3% lower than in Queensland.
By contrast, management fees in regional areas remain steady, with portfolios in some regional Queensland areas achieving management fees of above 8% plus GST. This is very unusual in the Southeast, where portfolios having an average management fee of below 7% plus GST are becoming more common. Outside of Southeast Queensland, where average rents are generally lower, property managers are less inclined to accept reduced management fees.
Despite pressure on management fees, particularly in the Southeast corner, the sale price multiples achieved for rent roll transactions remain steady. This is largely because higher rental incomes offset the impact of reduced management fees, limiting any overall impact on earnings.
Recent Government Reforms
The Queensland Government has introduced rental reforms in response to rising rents, including;
- New rental reforms from 6 June 2024, including a ban on rent bidding
- These changes may impact the sector in the medium term and slow the rate of rental increases to below those experienced over the last two financial years. As a result, Property Managers may be less likely to accept further management fee reductions, leading to stabilisation.
Rental increases are limited to once every 12 months from 1 July 2023
Portfolio Sales & Business Transactions
- Most active market transactions include portfolios of 100 to 200 properties
- Smaller portfolios are often added to an existing larger portfolio to achieve economies of scale with ownership transferred upon purchase
- Increasing trend in whole business sales, including rent roll, sales division, premises, and lease transfers.
The increase in whole business sales is primarily driven by the “silver tsunami” as retiring principles exit the industry. These sales are attractive to buyers as the retiring principal often stays on to ensure a smooth transition, and they reduce the risk of competition. These transactions can also be company sales and offer transparency to landlords, reducing management losses.