Real Estate Sector Snapshot

Transcription

1 Real Estate Sector Snapshot Sources: L6720 Real Estate Services in Australia Industry Report, IBISWorld Industry activity is mainly influenced by economic activity and interest rates Household formation and population growth influence demand Products and services have essentially remained the same over a long period of time IBISWorld, Oct 2014 Job Roles: Property sales, property management, property leasing, strata management and other services - property valuations, fiduciary and escrow consulting, and miscellaneous consultancy fees in addition to reimbursement from property owners for various expenditures. Broader industry also includes research agents, listings agents and some tenant representatives. Products and services segmentation ( ) 4.4% Property leasing 2.5% Other services 32.2% Property management 60.9% Property sales Total $10.7bn Source: CPSISC - ENVIRONMENTAL SCAN : APPENDICES

2 Number employed Employment in growth or decline Majority employed in small / medium or large businesses Majority employed in regional and remote or urban areas Employment is currently sitting at 73,216, and is expected to rise to 78,833 by Moderate employment growth towards November DoE reports employment rose moderately in the past five years and slightly in the long-term (ten years). Technology and increasing online real estate services will lead to the gradual decline of establishment numbers, which are expected to fall at an annualised 1.3% over the five years through Property management is growing due to higher demand for rental properties as housing prices, and hence initial deposits, continue to rise. Property investment will be driven by a favourable economy and population growth over the next five years. Increasing levels of higher density residential property as construction and governments respond to growing urbanisation, flowing onto increased demand for real estate services. Foreign investment is driving the commercial market s recovery. Healthy economic conditions, including strong market transparency, solid GDP growth, market stability and geographical proximity to emerging markets, are attracting more foreign and local investment primarily for office property. IBISWorld reports 39,280 businesses, characterised by a large number of small, self-employed agents and property managers. Mid-sized businesses dominate all states. The largest businesses have the strongest presence in smaller markets, notably the NT and the ACT, because they are competing with much smaller operations in these states. The regional distribution of enterprises is largely a reflection of population demand pressures. Future enterprise growth will follow regional population movements and commercial growth areas, which dictate commercial real estate demand. Most real estate agents are located in the eastern Australian states - NSW, VIC and QLD. Growing presence of the real estate services in WA over the past five years due to the resources boom. CPSISC - ENVIRONMENTAL SCAN : APPENDICES 177

3 Gender (% share) Real Estate Agents All Occupations % Males FT Males PT Female FT Female PT The graph shows the share of employment (%) for males and females, employed full and part-time, compared with all occupations. Source: ABS Labour Force Survey, annual average Estimates have been rounded and consequently some discrepancies may occur between sums of the component items and totals. Proportion full-time to parttime workers Proportion of industry that have completed Certificate III or IV Real estate agents have an above average proportion of full-time jobs (85.1%). Average weekly hours for full time workers are 45.2 (compared to 41.1 for all occupations). The most common level of educational attainment is Certificate III / IV (29.6 %). Educational attainment (% of employment) Real Estate Agents All Occupations % Post Graduate/ Graduate Diploma or Graduate Certificate Bachelor Degree Advanced Diploma/Diploma 0.00 Certificater III/IV Year 12 Year 11 and 10 Below Year 10 The graph shows the highest educational attainment (% share of employment) for this occupation compared with all occupations. Source: ABS 2013 Survey of Education and Work (SEW). The measure of overall educational attainment is the ABS HEAP variable, which regards successful completion of Years 12, 11 or 10 of school as a higher attainment than a Certificate II coupled with any lower level of schooling. Estimates have been rounded and consequently some discrepancies may occur between sums of the component items and totals. joboutlook.gov.au/occupation.aspx?search=keyword&tab=stats&cluster=&code=6121&graph=ep 178 CPSISC - ENVIRONMENTAL SCAN : APPENDICES

4 Current economic impediments for this industry Licensing and regulation Real estate endures a medium level of revenue volatility - sales increase volatility, driven by changes in interest rates and government incentive programs. Property management tends to reduce industry volatility given the more stable nature of rental income. The demand for real estate property has varied by sector (residential, retail, office, industrial and rural); with demand affected by changes to a range of economic, demographic and financial factors over the past five years. Changes to interest rates, unemployment levels, income, consumer confidence and access to finance have affected the purchasing power of companies and investors. This has impacted sales volumes, property prices and rental rates, which have then affected revenue growth margins. This revenue volatility is expected to decline over the next five years. Tight regulation by state and territory governments. The Property Occupations Act 2014 saw the deregulation of commissions charged by agents in QLD in May 2014 this became the last jurisdiction to deregulate commissions. The drive to implement national occupational licensing in the real estate industry (led by NOLA 42 from 2008) was abandoned in December Work safety guidelines for the real estate industries have been released in VIC, QLD and NSW, helping agents to identify risks to employees. The Victorian Practice Code Real Estate Agent Out-of-Office Safety released in 2006, aims to help protect real estate agent staff from dangerous people and prescribes practices and penalties for breaching the code. In 2008, Victorian legislation was amended to state that the auctioneer must make clear that the auctioneer is not able to accept bids or offers for a property after the property has been knocked down to the successful bidder. 42 National Occupational Licensing Authority CPSISC - ENVIRONMENTAL SCAN : APPENDICES 179

5 Impact of globalisation Capitalisation on international markets by selling properties to foreign investors is a growing trend brought on by globalisation. There is now the ability to establish offshore operations to participate in cross-border sales and in overseas real estate markets. Firms pursuing opportunities offshore have concentrated on the non-residential markets. The Foreign Investment Review Board (FIRB) regulations restrict the level of foreign investment in Australian residential property 43. Imports occur in the industry when a local vendor mandates an overseas-based firm to sell the property. The level of imports is low within the industry. Exports occur when a domestic firm is mandated to sell a property on behalf of an overseas vendor. The level of exports is low within the industry. Export levels are expected to increase over the five years through , due to higher demand for Australian property among Asian investors. IBISWorld estimates that this industry exhibits a low level of globalisation, with a low level of foreign ownership in local residential real estate establishments. Recent media reports however highlight a growing number of international buyers, particularly from China, purchasing residential homes in Australia more so in Sydney and Melbourne distorting the price points beyond the reach of local buyers. Globalisation is high in the commercial real estate segment. Most of the large national commercial real estate agents in Australia have been sold to overseas interests (e.g. CB Richard Ellis, Jones Lang LaSalle and Knight Frank). Jones Lang LaSalle states that large users of commercial real estate services demonstrate a desire for a single source service provider across local, regional and global markets. The ability to offer a full range of services on this scale requires significant corporate infrastructure investment. Smaller regional and local real estate service firms, with limited resources, are less able to make such investments. Some large overseas-based franchisers have entered the Australian residential real estate market. Local companies, such as LJ Hooker, have significant overseas-based franchise networks and franchisees. 43 In 2014 the operation of the FIRB was criticised by the REIA (Real Estate Institute of Australia) with a submission to the Parliament s Standing Committee on Economics Enquiry into Australia s Foreign Investment Policy 180 CPSISC - ENVIRONMENTAL SCAN : APPENDICES

6 Impact from technology Competition is growing from technological alternatives that allow buyers and renters to circumvent the industry altogether. Along with a correction in the residential property market, the bypass of real estate agents in favour of online channels remains the most significant threat for the industry over the next five years. Real estate agents are becoming more proactive in the use of technology, but take up is slow. Online portals (e.g. realestate.com. au, domain.com.au) will remain the agents front window for the 21st century, listing hundreds of thousands of properties for sale or lease. Improving technology will increase the popularity of virtual tours of properties through the internet. New applications will be developed to take advantage of the rapid uptake of smartphones by customers. Agencies will dedicate a greater percentage of their advertising and marketing budgets to online initiatives in the next few years as they begin to move away from traditional media channels. An ABS survey of the industry found that 70.4% of businesses had a web presence in IBISWorld estimates this figure to have grown closer to 99.0% in This is threatening the job of the real estate agent and leading to a more competitive market. Concerns have attracted the attention of the Australian Competition and Consumer Commission, which is investigating industry claims of undermining to their businesses through information available on online portals, and are requiring agents to reassess their business models. Ageing workforce concerns The main age group is years (23.6%) and the median age is 42 years (compared to 40 years for all occupations). Impact from population growth and / or demographics Strategies to encourage Indigenous Australian workforce participation The level and value of property sales and leasing activity, levels of home ownership and levels of housing rents all impact on market demand. In turn this is influenced by property values and yields, interest rates, economic growth, business profitability, household incomes, household wealth, taxation considerations, population growth and ageing, employment growth and the varying number of people per household. The frequency that people change homes and investment in rental housing property assets also impacts demand. Growth in overseas students and the mobility of Australian students have encouraged the student accommodation market, benefiting sales and leasing. Population growth, new home construction, low interest rates, the availability of flexible mortgage products, and the volume of the total stock of housing impacts on residential property revenue. The REIA reports that there are few Indigenous Australians working in the capital cities, and recommends that targeted funding for Traineeships for Indigenous Australian participants would assist this number to increase. CPSISC - ENVIRONMENTAL SCAN : APPENDICES 181

7 Changing profile of the learner at work Current and emerging skill gaps Ways to boost skill levels to meet any skill shortages Workforce priorities Anecdotal notes on workforce development needs IBISWorld reports that there is a need for qualifications that provide for specialisation but also offer opportunities for learners to gain a mix of property sales, property management, administrative and general management competencies. The REIA advises that sales training is adequately covered in the industry, as this is the mainstay of all real estate agencies, however national training for property and strata management is needed to encourage better mobility of the existing and future workforce. National legislation in many areas (such as swimming pools safety, and smoke alarms) would complement this encouraged mobility. Current state and territory legislation is an impediment to a national approach. Technology is the biggest impact on the industry, with one third of agents seeing technology use as their top business priority. Many agencies no longer rely upon print media for advertising properties and post listings online. With buyers demanding comprehensive data and virtual tours of properties on-line before approaching an agent with an inquiry, the industry needs to upskill its workforce to take advantage of technological opportunities such as video tours and SMS alerts, and reaching their clientele in innovative ways. The sector will require more specialised training to take full advantage of the technology introduced. This impacts not just on new entrants to the sector, but also on the upskilling of many in the current workforce. REIA advises that encouraging workforce mobility is the best approach. For example, in strata management roles the burn out is high, whether in this role early in a career or later. There are not enough new entrants for this occupation, with a low percentage of workers in the years age bracket. National regulation for strata management would encourage skill development to boost this workforce. The real estate services sector is tightly regulated by state and territory governments through laws governing the entry requirements and the conduct of firms and their employees. The workforce is required to maintain knowledge of these regulations as they impact their day to day work practice. A number of occupations within this sector are subject to state and territory occupational licensing requirements. The majority of RTOs delivering training in this sector do so for licensing purposes, with requirements varying across jurisdictions. The next generation of Australians is expected to rent for longer periods, which will increase demand in rental marketing and management services. Services common in Europe such as buyer s agents who match buyers and sellers through brokering services rather than operating solely through larger selling agencies, are likely to grow in Australia. The REIA notes that with Australia building more apartments than houses in 2014, the rental market will expand. This will create a supply and demand issue for property managers. 182 CPSISC - ENVIRONMENTAL SCAN : APPENDICES

8 Security Sector Snapshot Sources: O7712 Investigation and Security Services in Australia Industry Report, Oct 2014, IBISWorld, Oct 2014 The industry is moving away from labour-intensive guards and patrols to electronic security Outsourcing of security services from business and government is driving demand Technology improvements are contributing to slow growth due to labour replacements IBISWorld, Oct 2014 Job Roles: Three broad service areas: Electronic security: closed circuit television (CCTV) and surveillance, access control, video and audio intercom systems, integrated security and fire systems, home automation, building management systems, biometrics, alarms and alarm monitoring Manpower/guarding: crowd control, airport security, guard services, mobile patrols, concierge duties, traffic management, emergency response, cash-in-transit services and risk assessment Physical/barrier security: locksmiths, perimeter fencing patrols, security grill, bollards and boom gate installation, safes installation and maintenance, and records protection The sector also covers specialist services in investigations and risk management application Products and services segmentation ( ) 8.2% Secure document handling and storage services 8.9% Crowd control services 4.6% Other security services 26.4% Mobile guards and patrol services 11.1% Cash-in-transit and armoured guard services Total $6.3bn 16.2% Security system monitoring services 24.6% Private investigation services Source: CPSISC - ENVIRONMENTAL SCAN : APPENDICES 183

9 Number employed Employment in growth or decline Majority employed in small / medium or large businesses Majority employed in regional and remote or urban areas Proportion male to female workers IBISWorld reports an estimated security workforce of approximately 55,700, with the DoE s 44 November 2013 figures reporting slightly higher amount of 56,300. However the industry association ASIAL 45 advises CPSISC that there are currently approximately 110,000 licensed security personnel in Australia - a significantly higher workforce and almost double other statistics publicly available. Low wages and often difficult working conditions lead to a very high labour turnover. IBISWorld reports that industry employment is forecast to increase by an annualised 1.6% in the five years to , with 60,200 expected employed. Growth in security guarding will result from of heightened community concern with global terrorism and increased need for public safety. The sector includes several major companies, international enterprises, plus many smaller operators in general guarding/crowd control and investigative services. This will only change slightly over the five years through , with consolidation continuing through the largest players acquiring smaller ones to provide niche services, as well as to grow revenue and profit margins. The industry will remain highly fragmented, particularly in areas such as private investigators. The large corporate sector (offices, retail and other industries) is the major market for investigation and security services - such as security monitoring, guard patrols, armoured guards and crowd control. This suggests the majority of these businesses are in cities and urban areas. As business activity and population is more concentrated in the eastern seaboard states, in , NSW, VIC and QLD are estimated to account for 81.8% of industry establishments, and together these three states account for 78.8% of industry revenue. This is due to higher population and business numbers, a higher incidence of crime, surveillance and monitoring services provided in-home to households and businesses. Many national operators service the administrative needs of their clients contracts through their head offices in the eastern states. Most security officers and guards are male. The DoE records 63.8% male full-time workers, and only 8.8% female full-time workers. 20.0% of the sector are male part-time workers and 7.4% are female part-time workers. 44 Department of Employment 45 The Australian Security Industry Association Ltd (ASIAL) is the peak national body for Australian Security providers 184 CPSISC - ENVIRONMENTAL SCAN : APPENDICES

10 Strategies to encourage female workforce participation ASIAL advise that larger security employers are compliant with the Workplace Gender Equality Act 2012 and focus on supporting women in the organisation through management and mentoring. Security is a dynamic and challenging industry where customer service is highly valued. ASIAL informs CPSISC that interpersonal skills in dealing with difficult people in challenging situations are highly valued, so that potentially volatile circumstances presented in security work can be circumvented with a rational and calm manner. A number of companies aim to increase the number of women working in the organisation during , with a focus on gender equality in senior management positions. Gender (% share) Security Officers and Guards All Occupations % Males FT Males PT Female FT Female PT The graph shows the share of employment (%) for males and females, employed full and part-time, compared with all occupations. Source: ABS Labour Force Survey, annual average Estimates have been rounded and consequently some discrepancies may occur between sums of the component items and totals. Proportion full-time to part-time workers Proportion of industry that have completed Certificate III or IV 72.6% of security officers and guards work full-time. Average weekly hours for full-time workers are 40.5 (compared to 41.1 for all occupations). The most common level of educational attainment is Certificate III / IV (25.0%). In many states and territories, licensing requires a Certificate II level as an entry requirement. CPSISC - ENVIRONMENTAL SCAN : APPENDICES 185

11 Educational attainment (% of employment) % Security Officers and Guards All Occupations Post Graduate/ Graduate Diploma or Graduate Certificate Bachelor Degree Advanced Diploma/Diploma Certificater III/IV Year 12 Year 11 and 10 Below Year 10 The graph shows the highest educational attainment (% share of employment) for this occupation compared with all occupations. Source: ABS 2013 Survey of Education and Work (SEW). The measure of overall educational attainment is the ABS HEAP variable, which regards successful completion of Years 12, 11 or 10 of school as a higher attainment than a Certificate II coupled with any lower level of schooling. Estimates have been rounded and consequently some discrepancies may occur between sums of the component items and totals. Current economic impediments for this industry Licensing and regulation Security guarding is highly labour intensive and is requiring more expenditure on supporting technology. ASIAL advise that a lower Australian dollar will increase prices on any imported technology but could be offset by lower interest rates influencing capital expenditure for projects and increasing employment prospects. Key external drivers that promote industry performance include: Level of criminal activity actual and perceived increases in crime typically lead to an increase in demand for security services Number of businesses most businesses require some type of security system or service Demand from general insurance upgrades to security systems as part of policy renewal processes Population growth in population leads to greater demands for security This industry is heavily regulated, and the trend of regulation is increasing 46. ASIAL provides certification of compliance for members to Australian standards such as alarm monitoring centres 47. All states and territories have some controls for the licensing of people and operators, codes of practice under the Private Agents Act also regulate this sector. In most states and territories police departments are involved in the licensing of individuals or companies, and carrying and use of guns is regulated under gun laws in each jurisdiction. 46 Security industry licensing is usually controlled and applied by either state or territory police or by Departments of Fair Trading and Consumer Affairs. Resource-Centre/Security-licensing 47 Standards are published documents setting out specifications and procedures designed to ensure products, services and systems are safe, reliable and consistently perform the way they were intended to. They establish a common language which defines quality and safety criteria CPSISC - ENVIRONMENTAL SCAN : APPENDICES

12 Impact of globalisation Impact from technology Global events that have posed a public threat to security have reinforced consumers needs and focus on security. Security threats around the world such as recent events in Sydney, Canada and France have raised this awareness. Policies on border protection have also impacted the industry s scope. The security industry has a medium globalisation level with few major Australian-owned players having significant foreign operations, and are predicting an expansion of their services internationally, in existing local markets and other countries in the Asia-Pacific region. There are several major foreign companies in the industry, and globalisation will increase, particularly from the expansion of existing foreign operators in Australia. There is a high degree of foreign ownership of the major companies in this industry, mostly through foreign acquisition of local companies. Technical security is the fastest growing area and reducing the heavy reliance on labour, introducing higher tech electrical alarm systems and the provision of security monitoring services High-tech surveillance and data delivery tools will be at the front line of security and investigative services over the next five years, with more private and public places to be subject to electronic surveillance, and households, businesses and governments seeking greater security and protection The strong trend toward electronic security services includes sophisticated techniques in the biometrics area, radio frequency ID (tagging) and RFID3 chip technology for controlling access to premises plus wireless home security systems. CCTV mesh networks that cover very large areas with seamless surveillance are part of the latest technology developments New technology (e.g. optical fibre networks) will enable effective and cheap electronic security monitoring services for commercial, industrial and domestic premises, which could lead the industry into a stronger growth phase GPS tracking of goods is integrating with security and will require more highly specialist technicians and equipment operators - impacting on new entrants and current workers needing upskilling Biometrics is a relatively new area within VET for this industry, being the study of the physical characteristics of a person to ultimately distinguish one person exclusively from all others Ageing workforce concerns The main age group is years (23.8%) and the median age is 41 years (compared to 40 years for all occupations). Impact from population growth and / or demographics Economic opportunities to supply services to a larger market would be advantageous and allow companies to resource plan for the future. Population growth will provide industry employment opportunities, and migrant workers and mature age workers would be a key source for employment. CPSISC - ENVIRONMENTAL SCAN : APPENDICES 187

13 Strategies to encourage Indigenous Australian workforce participation Changing profile of the learner at work There is a need to develop a strategic approach to encourage a higher percentage of Indigenous Australian employment and training for this sector, through the development of an industry specific approach. Industry players need in some cases to establish or maintain stronger partnerships with agencies supporting and connecting Indigenous Australian jobseekers. Increased assistance is needed for the provision of quality advice to security industry stakeholders on Indigenous Australian cross cultural requirements that impact on the workplace, particularly in the private sector, and further work needs to be done in promoting employment in this sector, such as participation in Indigenous Australian mentoring program to support retention and career progression. ASIAL suggests that there are opportunities for upskilling workers as the industry s skill needs change, particularly in the technology realm. Access and equity is a necessary consideration in offering employment opportunities to people from all walks of life, and promotion of this in the recruitment and support of workers is important. The provision of meaningful opportunities to break the cycle of unemployment through this industry is encouraged by the industry association and training and employment support for such new entrants often from a disadvantaged background is advocated. Key initiatives suggested to help security businesses with their training needs include: Targeted assistance and guidance on accredited programs Development of client specific or site specific training to meet a client s need or contractual requirement Coordinating training programs on behalf of the business Current and emerging skill gaps Keeping up to date with emerging technologies and their skill requirements is a core challenge to maintain the capabilities of the security industry s workforce. ASIAL advises that LLN support is a constant requirement. New entrants from ESL 48 backgrounds need to be competitive in obtaining employment opportunities, particularly in the high consumer contact area in the provision of crowd control and guarding services, and LLN skills are often a barrier. 48 English as a Second Language 188 CPSISC - ENVIRONMENTAL SCAN : APPENDICES

14 Ways to boost skill levels to meet any skill shortages Workforce priorities Anecdotal notes on workforce development needs The Certificate II in Security Operations is required to commence work in the industry and RTOs need to provide the training that meets each state or territory s licensing requirements for security officers. This is consequently the compulsory VET pathway to work in this sector. ASIAL suggests that skill shortages (in technology, for example) can be boosted through a supported career pathway aligned to nationally accredited training. Improved skills in stakeholder engagement and customer service require a workplace culture change in some companies, and performance management processes are needed in businesses to provide targets and measurement of performance. Recruiting and retaining suitably skilled, reliable security staff is important for security companies to provide high service levels to clients, and can lead to contract wins and growth in repeat business. This means that the overall workforce capabilities of the security industry are an important link to its productivity. Licensees are struggling to keep up with legislative changes e.g. bikie laws in QLD, lock out laws, and one-punch laws. A significant increase in responsibility for crowd controllers and recent election upsets may lead to further legislative changes. Licences can be suspended based on a criminal charge only, without necessarily being found guilty or convicted Fines have increased significantly due to lack of substantial training e.g. online courses ID scans will be introduced in QLD for patrons entering venues after 10pm which will raise costs On 20 January 2015 ASIO raised the terrorism level threat for police from medium to high. This follows the National Terrorism Alert Level being raised from medium to high in September Review of security arrangements in the private security sector may be necessary, especially for crowd controllers and security in public arenas CPSISC - ENVIRONMENTAL SCAN : APPENDICES 189