The last year has been awful for Hong Kong landlords. Having enjoyed decades of growth and capital appreciation, they’re now facing rising vacancies, dropping rental prices, and more market uncertainty. Landlords must adapt to the new environment quickly or they’ll soon be left behind. Big Data and technology can give them a competitive edge.
Background:
In Hong Kong, property listing prices are based on comparable transactions. Landlords typically list their properties based on a similar property’s recent transaction price, even if the conditions of the two properties are completely different. They determine their rental price based on:
- Previous tenant’s rent +/- (3-5%)
- Look up current listings in the same building on property agencies’ website or on listing portals
- Ask a property agent (who will look up listings for you)
Thereafter, the landlord will work to close a deal. Our landlord clients only work with agents and don’t use property listing portals directly, so here are the funnel steps they go through:
You can significantly improve your conversion rates simply by tracking the number of deals that reach each stage. This would give you a lot of insights into which areas you can focus on.
How big data and technology will change this
Landlords who empower themselves with more data will make better decisions.
First, aggregate the recent transaction data of similar vacant units. Knowing the competition’s asking price and volume of units will help you stay competitive. It is possible to search on many different websites and manually summarize the data.
One of our landlords received a below-market offer for his office property, and because he quickly learned that the same building had over 15 other vacancies, he was decisive and accepted the offer immediately.
Second, keep your property information, such as photos, floor areas, and management or government expenses easily retrievable and updated. This will dramatically save you time. We’ve seen some landlords take hours, or even days, to retrieve old information like this. Our landlords let technology automatically collect their property information and broadcast their listings to many agents for them in seconds.
Third, track your interactions with agents. This will help you understand the market much better.
Once, we sent out an office property to 30+ agents automatically (funnel step #1) but received 0 enquiries (funnel step #2). After speaking to some agents, we learnt that the unit was too dimly lit and the photo quality wasn’t good enough for them to advertise the unit.
Another time, we sent out a residential property to 25+ agents (funnel step #1), and there were 5-10 onsite viewings of the unit (funnel step #3), but there weren’t any offers (funnel step #4). We learnt that the flat wasn’t in a good condition and quickly fixed it up.
Lastly, automate updating your agents with the listing. In the current market, you may wish to lower your prices. Use technology to update all agents automatically so that they always have the most accurate information.
Property agents regularly call landlords to enquire about the availability of the unit. Not all agents will do this check, and makes it less likely for them to push your listing. Technology can handle up to 70-80% of this work for you and it will give the agents confidence to promote your listing.
Summary of data needed:
- High-quality photo and video footage to send to all agents
The better quality photos and videos you have, the easier it is for agents to promote your listings. Agents are working with many properties. Don’t depend on them to get the best quality footage to show to clients.
- Saleable and Gross floor area to send to all agents
These things are easy to store in one place and will help the agents push your listings faster.
- List of agents to work with
This information changes regularly and may be tough to track manually. Alternatively, you can simply create a single list with all agents and simply add more agents over time.
- Track whenever an agent visits the flat
Follow up with an agent after they’ve visited the flat and hear their feedback from their tenant. That usually can give you more insights into the state of the market.
- Log any offers received from tenants
If you didn’t accept any offers a few months ago, it is helpful to reflect to see whether you made the right decision. This helps improve your decision making going forward.
There is a huge shift towards digital. It is important for real estate professionals to adapt quickly. Without data and technology, you will be far disadvantaged compared to many other landlords in Hong Kong. With higher quality data, you too can stay competitive in today’s real estate market.
