Real Estate Agents in Australia March 2012 18
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks Basis of Competition | Barriers to Entry | Industry Globalisation Market Share Concentration Level Concentration
in this industry is Low
Key Success Factors IBISWorld
identifies 250 Key Success Factors for a business. The most important for this industry are:
IBISWorld estimates that the four largest operators will account for just over 15% of industry revenue, indicating a low market concentration. According to the ABS, businesses that make over $2.0 million only account for 4.8% of all businesses in the industry. The largest businesses have strongest presence in smaller markets, notably NT and ACT since they are competing with much smaller operations in these states. Rather, industry operators are
predominantly self-employed and localised firms, although a number participate in national franchise systems. A significant proportion of national operators operate in the commercial and rural segments. The market share of the largest four operators had been slowly increasing up to 2007-08. However, the advent of the global financial crisis stalled the progress of the large companies in gaining market share.
Proximity to key markets The position of the agency office is important; it should be close to the customers it intends to serve.
centres of influence.
Access to highly skilled workforce Performance of staff should be regularly assessed. Low performers should be cautioned and/or re-trained, or they should be quickly replaced by new sales staff. Aggressive marketing/franchising – given the high level of competition A significant amount of effort and time should be devoted to marketing and promotional activities. It is also important to develop a referral base and
Cost Structure Benchmarks
Costs are expected to account for 93.0% of industry revenue in 2011-12, while profits will make up the remaining 7.0%. The largest cost for real estate agencies is wages and salaries, which have decreased as a percentage of revenue over the past several years. This has been a result of companies reducing operational expenses in response to slowing sales volumes and profit margins. Recently, many of the leading agencies have employed on a commission-only basis. A significant proportion of costs are linked to property management,
Management of portfolio The effective management of assets and tenants enables agencies to maintain a continuous leasing revenue stream. Having contacts within key markets For commercial real estate agencies, it is important to establish strong relationships with institutional and private investors, banks and international real estate agencies. Market research and understanding Property research activities can bolster revenue from sales and property management.
marketing and administration services. This comprises about 20.1% of revenue and includes the expenses associated with selling and managing real estate property, such as procuring and retaining tenants, collecting rent, auction costs and advertising. In addition to the expenses listed above, companies in the Real Estate Agents industry incur various costs that affect their daily operation. These include rent (10.8% of revenue), utilities (1.1%), depreciation (1.8%) and other operational costs (10.5%).