Developing rental properties in a downturn

Over the last years, we have seen a growing interest in the Danish real estate market from foreign investors and pension funds. This trend has only been boosted by low interest rates.

Several investors have benefited from the fact that prices have been on the rise and for that reason, there hasn’t been a need to further develop the rental properties to achieve a satisfactory return on investment.

Many property portfolios have been built up at high purchase prices.  We will most likely now be facing a downward adjustment in real estate prices due to rising interest rates and a lurking crisis, as inflation has reached a record high.

More and more property owners are seeing an opportunity to change the business case of their property portfolios. Instead of changing the size of the portfolio, the focus is shifting to improving the returns on the existing properties. This can be done in ways such as:

• Getting closer to the tenants and knowing their needs to increase loyalty.
• Monitoring the communication between the tenants and the property managers.
• Creating internal waiting lists to keep tenants in their portfolio.
• Making it easy for tenants to communicate with the property manager - including evenings and weekends
• Managing the property’s operations so that they are carried out optimally
• Creating additional revenue streams through the rental of shared facilities and developing new sources of income.

All this requires retrofitting a technical setup to make it possible. Currently, the owner usually doesn’t have access to nor control over most of these processes, as they take place between the property administrator and the tenant.

The key to fixing the situation is to bring the owner and the asset manager closer to the data and the processes to see how they are organized. This allows them to be involved in designing new, more effective solutions.

Being able to provide the Asset Managers with access to the key figures will allow them to speed up the development of the property and thus achieve a more satisfactory return for the owner.

Hococo is happy advise on how to develop your property - please don't hesitate to get in touch us and book a meeting to hear how we can help you.

William Shaw
Co-founder and CEO of Hococo

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