Brisbane 2024 Management Rights Sales Report by Multimedia AU/NZ

Resilient amid rising challenges

By Grantlee Kieza OAM, Industry Reporter

As Brisbane's Management and Le ing Rights (MLR) industry navigates rising interest rates, inﬂation, and shrinking le ing pools, its resilience shines through. Despite these challenges, savvy investors continue to see long-term potential in the sector, driven by the city’s booming real estate market and preparations for the 2032

Olympic and Paralympic Games.

Key players in the industry report a normalisation of business prices following the sharp spikes of the past two years, while experts predict a steady, if evolving, market for both seasoned operators and ﬁrst-time buyers.

This report provides insights from industry leaders, brokers, and ﬁnance experts on the current state of the sector, including the impact of economic forces, the need for be er buyer education, and the unique opportunities arising from reduced supply and rising rents. As Brisbane's MLR market

transitions, stakeholders continue to adapt, leveraging their expertise to navigate this dynamic and lucrative industry.

Nathan Eades, National Director at Ras360, observes that prices for MLR businesses are “normalising” a er sharp spikes over the past year and a half. “There were a couple of speciﬁc types of management rights that really peaked – small businesses under $100,000 proﬁ t and the

Nathan Eades

Image courtesy of Visit Brisbane

big, high-net-worth businesses with $1 million-plus proﬁ ts. Multipliers for those rose signiﬁcantly, but we’re starting to see them so en and return to where they were before the spike,” Mr Eades explains.

Along with his colleague Robert Collins, Mr Eades is currently marketing a Central Brisbane MLR business listed at $11.8 million, generating a net proﬁ t of $1.64 million.

Ras360’s Malcolm O’Farrell also adds that although inquiries and new listings have declined from a few years ago, sales numbers have remained steady.

“There’s been a deﬁnite drop in multiples across the board,” he says.

“Anything from half to a full multiple, but it’s just a correction from the peak 18 months ago. I don’t think we’ve dropped below where values should be; we’re simply adjusting back to more realistic levels.”

Mr O’Farrell is currently marketing MLR businesses for Windsor Heights in Windsor and Kokoro in Albion, both caretakingonly properties with minimal le ing. He’s also handling NEO North Lakes, a larger permanent complex with 44 le ing appointments and two bodies corporate – commercial and residential. “There’s a huge opportunity for someone to come in and grow that business,” he notes.

Bobo Qi, Director at Property Bridge, acknowledges that Brisbane’s MLR market initially felt the strain of rising interest rates, but she has recently noticed an improvement

A market in transition

Bobo Qi, Director at Property Bridge, acknowledges that Brisbane’s MLR market initially felt the strain of rising interest rates, but she has recently noticed an improvement. “Since August, I’ve noticed the market improving. We’re seeing more inquiries, and activity is picking up again,” she says.

For businesses with proﬁ ts exceeding $400,000, multiples have remained stable. Smaller businesses with proﬁ ts between $100,000 and $150,000, however, have seen drops in multiples as the value of a ached real estate has increased.

Property Bridge is currently marketing a city MLR business with a $530,000 proﬁ t and a body corporate salary of $400,000, listed with a 6-plus multiplier.

Supply constraints impact the market

Management Rights Sales Director Michael Philpo , who oversees four brokers in Brisbane – Ben Lynn, Peter Ross, Bill He, and Phil Trimble – highlights “limited supply” as a pressing issue. Ben Lynn reports that while his team continues to make sales in Brisbane, supply constraints are creating challenges.

Malcolm O’Farrell

Bobo Qi

Michael Philpo

“The MLR industry in Brisbane is seeing a dynamic shi , reﬂected in recent listings and sales data from the past 12 months,” he explains. “Driven by evolving market conditions and investor preferences, the industry continues to adapt as operators and buyers navigate challenges unique to Brisbane’s urban landscape.”

With the 2032 Olympics and Paralympics on the horizon, the average multiplier for management rights businesses on the market currently sits at 4.72. Mr Lynn notes that prominent complexes are seeing sustained high asking multipliers, with some reaching as high as 6.95 for businesses ne ing more than $500,000. “These numbers demonstrate stable interest in the MLR sector, despite broader economic pressures such as rising interest rates and inﬂation,” he says.

However, Mr Lynn emphasises that ROI ﬁgures suggest modest returns, typically ranging from 12.6 percent to 15.4 percent, requiring careful ﬁnancial planning by potential buyers.

He also highlights that rental pools in MLR complexes continue to feel the pressure of reduced rental stock and an increase in owner-occupiers. “A li le under 3000 apartments are under construction in Brisbane for 2024, and that number is expected to drop below 1500 in 2025,” Mr Lynn explains. “If all projects under construction proceed, they will only add 4356 dwellings to the market – well short of the 7500 a ached dwellings needed annually, according to the government’s Southeast Queensland Regional Plan.”

As economic forces play out, Mr Lynn notes the increasing importance of decoupling managerial units from MLR businesses, particularly in larger urban complexes where they are viewed more as separate entities. “Banks remain hesitant towards management rights with returns under

$150,000, potentially limiting market ﬂuidity in the lower segment and pu ing pressure on multipliers,” he adds.

Insights from ﬁnance experts: A mixed outlook

Paul Grant and Cameron Wicking, leading ﬁnance brokers from Mike Phipps Finance, agree that the high end of Brisbane’s MLR market remains “solid,” with a steady stream of quality transactions. However, the lower end is slowing down, impacted by rising real estate prices and interest rates. “I think we will start to see a shi towards a greater focus on return on investment, similar to what we’ve seen on the Sunshine Coast and Gold Coast,” says Mr Grant.

Mr Wicking adds, “Overall, I believe the ‘Olympic E ect’ is very real for the mid-tohigh end of the market and will drive growth for the next decade.”

Legal perspectives: Transactions continue amid high real estate costs

Frank Higginson, Director at Hynes Legal, says MLR transactions in Brisbane have kept him “relatively busy – but not frantically busy” this year. “Deals are still ge ing done, but it’s harder to sell businesses with expensive real estate a ached, as they generate lower net proﬁ ts. We’ve seen some pressure in that area, which usually leads to e orts to separate the business from the unit.”

Mr Higginson explains that a unit that might have sold for $300,000 ﬁ ve years ago could now go for $600,000 or more. “With higher interest rates, banks are scrutinising how buyers will service these larger loans,” he says. “But deals are still happening.”

Amy O'Donnell, partner at Mahoneys legal ﬁrm, adds that the industry remains stable, noting, “Plenty is going on.”

While operators are losing units to owner-occupiers, Mr Higginson explains that rising rents and Consumer Price Index (CPI) remuneration have helped o set some of the losses. “It’s a balanced market with a steady stream of transactions, which suggests prices are fair,” he adds. Most of the transactional work, he says, still involves traditional mum-anddad buyers, with a notable number of Chinese investors active in Brisbane.

Shi ing trends: Le ing pools decline

ResortBrokers Director Alex Cook, one of the most experienced agents in highend management rights, describes Brisbane’s permanent management rights market as a “bedrock of stability”

Paul Grant

Cameron Wicking

Frank Higginson

Amy O'Donnell

Ben Lynn

Photo by Brisbane Local Marketing, unsplash.com

Queen's Wharf Brisbane

throughout his 14-year career. “Even during the toughest times, including the pandemic, Brisbane’s MLR sector has remained remarkably robust,” he says.

However, Mr Cook points to declining le ing pools as the most pressing issue.

“Operators aren’t losing appointments to outside agents. Instead, lot owners are making the most of Brisbane’s skyrocketing real estate market,” he explains. “An apartment worth $500,000 three or four years ago is now worth $800,000. Investors are cashing in, and we’re ﬁnding they’re selling predominantly to owner-occupiers.”

Mr Cook also notes that buyers’ accountants are removing income made from units permanently lost from the le ing pool, which o en leads to renegotiation of sale prices. In the short-stay management rights market, Brisbane’s assets are tightly held, with many owned by longterm corporate holders. “We don’t expect many to transact for a while,” he adds.

Despite these challenges, Mr Cook reports a strong year in large-scale shortstay management rights sales. “Annexe Apartments, an 81-apartment complex in Bowen Hills, sold for $8.3 million, and Gabba Central Apartments, a 272-apartment complex, sold to a private syndicate for

more than $10 million,” he says. Other major transactions include Atrio Apartments, The Miro, MacArthur Chambers Apartments, and The Manor Apartment Hotel.

Mr Cook explains that larger, high-end management rights are increasingly being acquired by syndicates and private operators, rather than corporates like Minor or Accor (Mantra). “If you go back four or ﬁ ve years, a management rights business ne ing $500,000 was considered large. Now, $500,000 is considered medium,” he notes. “With market growth, interest rate rises, and ongoing corporatisation, a large management rights business is now considered to be around $700,000

to $800,000 or more before corporates or syndicates will look at it.”

He emphasises that management rights ne ing sub-$500,000 still make up an important part of ResortBrokers’ business. “Undoubtedly, our most highproﬁle management rights listing now is Queen’s Wharf Residences, part of the $3.6 billion Queen’s Wharf Brisbane integrated resort, the largest private construction project ever undertaken in Queensland.

“My fellow director Tim Crooks is the lead agent on that listing supported by Brisbane broker Jessie Shi. I’m occasionally assisting with certain aspects of the sale.” P40

Alex Cook

New Queen's Wharf Tower Star casino building Photo: Alexander, stock.adobe.com

WEST END

UNBEATABLE BRISBANE RIVER LOCATION

■ Stunning and modern residential apartments

■ Body Corporate Salary of $192,000

■ Not overburdened with building facilities

■ 2-bedroom manager’s unit $840,000

NETT $ 331,000 PRICE $ 2,697,000

Bobo Qi 0438 027 771 bobo@propertybridge.com.au

BUSINESS ONLY – INNER BRISBANE

■ No real estate to buy!

■ Attractive and compact townhouse complex

■ No pool, no BBQ, no gate

■ Simple operation and easily managed by one person

NETT $ 99,000 PRICE $ 465,000

Jim Lowe 0403 418 115 jim@propertybridge.com.au

NEW FARM

TERRIFIC RETURN ON INVESTMENT!

■ Inclusive of 2-bedroom, 2-bath, apartment. Value $950,000

■ Over 75% of Net Profit via salary of $400,000

■ Situated in the beating heart of Brisbane

■ An exclusive residential resort-style complex!

NETT $ 530,000 PRICE $ 4,300,000

Bobo Qi 0438 027 771 bobo@propertybridge.com.au

WACOL SOUTH-WEST BRISBANE - RESIDENTIAL

■ 24 years remaining on Management Agreements

■ $81,000 Body Corporate Remuneration is a strong base income

■ Very resilient and quality letting pool

■ Stand-alone 4-bedroom manager’s residence

NETT $ 200,000 PRICE $ 1,628,000

Selina Zhong 0468 886 010 selina@propertybridge.com.au

Property Bridge and team are honoured to receive the ‘Sales Brokerage of the Year’ award for 2024, as presented by the Australian Resident Accommodation Managers Association (ARAMA).

We are a proud ARAMA supporter, and recognise the immense contribution in supporting, educating and advocating for the Management Rights industry.

Be our partner in success and contact us now should you be entering the market to sell or purchase Management Rights

A buoyant market for permanent le ing

According to Sam Hodge s, partner at McAdam Siemon Business Advisers, the Brisbane MLR space remains “buoyant,” with signiﬁcant activity from both buyers and sellers. “The permanent le ing complexes are ticking along as they always have, with good multiples. These businesses have beneﬁ ted from the past two years of rental increases,” he explains.

However, Mr Hodge s notes that Brisbane’s rental pools have shrunk due to more owner-occupiers purchasing units. “The rise in rents and CPI remuneration from body corporates has helped o set these losses,” he adds. “In the past 12 to 18 months, we’ve also seen a pickup in short-term rentals following the COVID-19

fallout, with some businesses now seeing results be er than pre-pandemic.”

Challenges for lower-end buyers

Fan Li, from Onsite Management Rights, has found the market to be “very quiet” this year, primarily due to high interest rates and cautious buyers in the lower-priced segment.

units is creating barriers for lower-end buyers.

“If you’re working a normal job, and there are two of you earning $70,000 each, it’s a tough ask to get into management rights with these high interest rates,” Manson explains. “You’ll need to borrow $800,000 to make $100,000 a year. Even with a $200,000 down payment, you’re paying $36,000 in interest out of that $100,000 proﬁ t.”

Outlook for the future: Resilient and adaptable

Despite these challenges, Alex McCowan from Accom Valuers says Brisbane’s MLR industry remains “very healthy in certain sectors”. He continued: “There’s a huge demand for rental accommodation, and there’s practically no vacancy in any of the permanent buildings I inspect. If a tenant moves out, a new one moves in the next day. MLR businesses are earning big commissions, which have o set shrinking le ing pools.”

Multipliers have “come down slightly” in smaller Net Operating Proﬁ ts (NOPs) below $150k that include a manager’s residence, but he notes the market is still performing well, with net proﬁ ts over $600,000 seeing only minor adjustments.

“Interest rate rises have a ected borrowing power, making it harder to service loans, particularly when expensive real estate is a ached to management rights,” he adds. However, he believes the market will remain strong as rental demand continues.

Celine Tseng, from Shine Realty, agrees, noting that while the market has so ened, many sellers are still proﬁ ting due to rising real estate prices. “Higher interest rates and the rising price of managers’ units are making it more di cult to secure business ﬁnance,” Celine Tseng says.

David Manson, from MR Agents, highlights that the high price of managers’

Summing up the current state of Brisbane’s MLR industry, Tony Rossiter, Director at Holmans Accountants, points to the ongoing demand for rental accommodation as the strongest driver for the sector. “This demand is driving up rents, which beneﬁ ts management rights operators through increased commissions,” Mr Rossiter says. Although sales to owneroccupiers have put pressure on the industry, the increase in commissions has more than o set any revenue lost, in most cases.

While multipliers have remained steady, Mr Rossiter notes that rising living costs and interest rates are causing some buyers to delay major borrowing decisions. Despite this, he remains optimistic about Brisbane’s short-term le ing market, noting that it has performed well and is expected to continue to thrive as the 2032 Olympics and Paralympics approach.

David Manson

Alex McCowan Tony Rossiter

Fan Li

Celine Tseng

Sam Hodge s

Photo by ROMAIN TERPREAU, Unsplash.com

Greg Jorgensen, Founder and Director of Management Rights Brokers Australia, notes that the volume of sales for Brisbane MLR businesses hasn’t matched the levels seen two or three years ago, with rising interest rates being a key factor. Despite this, he continues to see interest from mum-anddad investors and many ﬁrst-time buyers. However, Mr Jorgensen believes the industry needs to focus more on educating these

prospective buyers, particularly the next generation. "Too many people enter the industry without a solid understanding of how to run a management rights business," he says, emphasising the need for greater support for new buyers.

Lawyer Peter Spranklin from Spranklin Legal agrees, pointing out that more e ort is being put into proﬁling buyers to ensure they are the right ﬁ t for buildings. “We’re experiencing more repeat

clients adding buildings to their portfolio in the current market, rather than an inﬂux of new entrants. That will lead to a wellpositioned industry for the future because when operators are more experienced there is plenty of experience to share with new entrants when the trend shi s,” he explains.

In conclusion, Brisbane’s MLR market remains resilient and adaptable. As Mr Spranklin sums up: “We’ve weathered the global ﬁnancial crisis, COVID, ﬂoods, development approval ups and downs, and yet the industry continues to thrive.”

Peter Spranklin

Greg Jorgensen

Contact: Eric Brizuela, 07 3554 0040 eric@brizcorp.com.au

Contact: Alex Cook, 0467 600 610 alex@resortbrokers.com.au

Contact: Joel McCartin, 0407 834 425 joel@ras360.com.au

Contact: Greg Yang, 0430 241 109 sales@onsitemr.com.au

Kangaroo Point, QLD

Contact: David Jiang, 0481 500 278 davidjianghui@nextrealty.com.au

Contact: Ben Lynn, 0456 640 414 ben@mrsales.com.au