Real Estate Industry Challenges

The commercial real estate markets in Asia and Oceania, especially in financial centers such as Singapore, Hong Kong, Shanghai, Tokyo and Sydney, are the most sophisticated in the world and boast the highest asset value and operational yield.

Four out of the world’s top eight real estate investment trust (REIT) markets are in Asia and Oceania (Japan, Australia, Singapore and Hong Kong).

Due to the high urban concentration of real estate value and very competitive markets, it is not easy to run real estate operations effectively and efficiently. The common and recurring challenges that large real estate players face are:

Wrong billing that has been identified will often have a bias towards overbilling (tenants may not report underbilling!); this means that if you do not bill right, you will end up collecting less.

If you are a professionally run real estate investment fund or listed entity such as a REIT, corporate governance is often a regulatory requirement.

However, pressure to deliver yield means many real estate operations will end up with low levels of supervisory staffing and plenty of opportunities for governance and control lapses, whether at the marketing and leasing front, or at facilities contract procurement front.

In addition to corporate governance requirements, you face heavy and complex periodic reporting responsibilities.

With vast transactional data volumes to process, coupled with a duty to submit timely and accurate financial and management reports, property managers have to handle crushing pressure constantly.

The International Financial Reporting Standard (IFRS) mandates complex accounting treatment for real estate revenue and expenditure recognition, such as rental and marketing fee amortization, further complicating reporting efforts.

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