Let’s dust off the crystal ball
The holiday season has come and gone, the kids are back at school and everyone is at work again.
Year 2012 produced a second half year rash of sales, most of which got to settlement and then the holidays came. Things were typically quiet during January that gave us a chance to look at what happened to the contracts that didn’t settle. As is the norm it turned out to be figures either not prepared properly by an accountant or old figures with managers saying “I think the net profit is still there” when it is not.
The other standout is value of manager’s residences in a volatile real estate market. Whether we like it or not, residence values do not attract the 10-20% loading they once did and independent valuations become important because if managers don’t get a valuation the buyer’s bank will and that will be the benchmark. Having said that, these are things that can easily be fixed.
So I borrowed Jake Clarke’s crystal ball, that he so often uses, to gaze into 2013 and get my own view of what it might bring for buyers and vendors. The enquiry rate has picked up where it left off before the holidays so the early signs are good that with interest rates as low as they are and the very low vacancy rates during December/January holiday buildings will start to move again.
Permanents have never been a problem and continue to be in demand. February saw a number of settlements and we currently have a number of buildings under contract, both holiday and permanent. Gold Coast, Brisbane, Sunshine Coast and Byron Bay appear to be the hotspots for buyers and I believe that will continue for the rest of the year.
Flights into the Gold Coast are at record levels and the number of overseas visitors, particularly from Asia, has increased dramatically. This will continue the growth of the holiday market in 2013 and it would appear that many people have taken advantage of low air fares and strong dollar and have had their overseas holiday and are returning to the domestic market – let’s hope it continues.
Well prepared and presented management rights are selling first and multipliers have risen slightly so as with anything if you put the right ingredients in the result will be a willing buyer and a willing seller agreeing on a fair price and a deal will be done.
I cannot stress enough the importance of up to date accountant’s figures, real estate valuation, 20As all signed, assignment clause ticked and initialled and a price to meet today’s market as the buyers are well educated and will only look at management rights if they believe they are value for money. Overpricing to allow for offers unfortunately stops potential buyers from even looking let alone making an offer to buy.
In summary my crystal ball gazing tells me that 2013 will be a good year for management rights if we all work as a team, present your business for sale in a professional manner and make it an easy process to buy rather than the buyer throwing up his hands and saying “it’s all too hard” and walking away. The buyers need to realise that this is not a bargain buy industry and fair market prices will see businesses change hands.
However if none of this comes to fruition, we can blame Jake’s crystal ball.
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