The local property market has faced some significant troughs over the past year. In the commercial property market, office spaces remain stubbornly empty as body corporates and investors look for new ways of attracting and retaining tenants. This trend has been most obvious in Johannesburg and Durban while Cape Town has managed to hold itself mostly upright against the headwinds of economic turbulence and market wariness. Other areas in the country continue to struggle for tenant attention while businesses and tenants look for the best deals and the most value before they sign on the dotted line.
The situation remains stubbornly tough as the country moves into 2020. The Rode’s Report found that office rentals remain disappointingly low while residential rentals remain under significant pressure with falling occupations and rising costs. It has become critical for the body corporate, the investor and the estate owner to find new ways of attracting tenants and adding value to their offerings.
“For most estate and property managers in the market it is a concern that tenant good standing numbers are continuing to decline,” says Michael Franze, Managing Director, Citiq Prepaid. “In a report released by the credit bureau TPN, these numbers have dropped to 81.8%. This puts pressure on the property manager to find ways of minimising tenant churn by keeping residents happy and engaged.”
The same TPN report also showed that the decline in demand for residential properties has been following a three-year downward trend with vacancy rates at a high 8.64%. However, it also pointed out that there remained ‘pockets of excellence’ with some rental portfolios achieving well above the average, nationally.
“The challenge is to become one of those rental portfolios that manages to exceed expectations and retain tenant good standing,” says Franze. “The ways in which properties can achieve this is through services and solutions that are customised to make tenant experiences more engaging and the property managers more approachable and understanding. Success in this market is about finding strong value propositions and leveraging these to stand out from the proverbial crowd.”
The question is – what can be done to keep the tenant happy? It’s unrealistic to personalise and cater for the myriad requirements of different tenants across multiple portfolios. Keeping residents happy is already a full-time job. What needs to change is how the property manager approaches basic services. Electricity and water utility management is one of the most problematic and complex administrative burdens placed on property and tenant alike. For the property – poorly managed utilities and vocal disputes can have a serious impact on reputation. The latter is particularly prevalent as services like Hello Peter gain national traction. For the tenant – the inability to manage spend and the inaccuracy of costs and payment dates can really affect their budgets and their stress levels.
“Recovering and managing utilities is a cause for stress for most managers and body corporates,” says Franze. “It’s a difficult situation made even more challenging by the different municipalities and their methods of managing and providing utilities and billing. Many municipalities are moving towards supplying estates and complexes with bulk electricity which means one meter services an entire estate. So, who’s left to manage the payments, amounts and billing? The property manager.”
It puts the manager in an awkward position with limited options. On one hand, the bill can be split pro rata across the tenants which invariably leads to overuse and conflict. Tenants dislike being forced to pay hefty bills for someone else’s profligate usage. The other option is to install individual kwH meters. This is far more likely to keep the tenants happy but they cost money to purchase and install, often a lot more money than the business was expecting. These meters also have to be read, tallied, billed and managed on a monthly micro level that’s expensive and tedious. Unfortunately, this can also lead to tenant conflict as they can challenge the reading or the manager – a problem that can occur if there’s already mistrust.
“The best way to bypass utility management complications is to invest into a prepaid sub-metering solution,” advises Franze. “It is a vastly superior method of managing utility expenditure and usage than manual readings, working out shared services and then painstakingly invoicing units. A well-implemented prepaid solution ensures that each unit has its own, independently measured meter, and that the funds are collected and paid directly to the manager without any additional administration.”
Citiq Prepaid’s sub-metering solution provides the property with reliable and well-designed meters that allow for users to spend what they have on the utilities they need. As Citiq Prepaid has already collected the funds from each unit it then deducts the fees and then pays the money directly to the trustee or person delegated to deal with the municipality. This ensures that the chain of payment from tenant to municipality is transparent and secure, and that payments can be made monthly without conflict or dispute.
“Citiq Prepaid is one of only a few vendors to provide both tenants and managers with a customised online portal where they can see reports, purchases and meters,” says Franze. “The features on the portal are different for tenant and property owner to ensure the information provided is relevant. The property owner gains access to an impressive range of reports that cover payments, collections, remittances and meter allocations, among other things.”
The Citiq Prepaid solution offers a layer of transparency to the management of a property. Tenants appreciate the fact that they are more in control of their usage and their spend. Purchasing tokens to pay for utilities is extremely easy – it can be done online or at leading, accessible outlets – so tenants can retain control and don’t feel that the burden of administration has now fallen to them. For the estate manager, it’s an extra value-add that they can use to streamline operations and relations.
“When building relationships with your tenants, you don’t want to have to quibble about money or argue about utility use,” concludes Franze. “It only serves to alienate people. However, by providing a residential or commercial property that has a transparent, accessible and reliable utility system in place, you are adding immense value to your service and your space.”