How developers can capitalise on the growing Build to Rent market in 2022

By Emmanuel Lavoie, chief executive of Jetstream Hospitality Solutions

We are in the midst of the most significant shift in working and living patterns in living memory. First, there was the move to remote working prompted by the pandemic. Now the trend is towards hybrid working. This blended model, where some employees return to the office, and others work from anywhere there’s an internet connection, looks set to stay.

Flexible living and working in short-term rentals is a growing market, but developers and investors need to urgently review how they manage flex property to make the most of their investments.

The talent landscape has fundamentally shifted. Remote work has created new job opportunities for some, offered more family time, and provided options for whether or when to commute.

Good employees are becoming way more empowered. More and more people will travel and work in Bali for a month or two, or they’ll live in Italy for a month or two, or Spain or South America. Anywhere.

So the demand for short-term rentals is enormous, with stays of two weeks or longer becoming more common, and we expect this to increase exponentially.

The continued boom in short-term rentals is driven in part by demand from nomadic workers, and families who want to travel while living and working in different locations. Plus, when looking for accommodation, people are increasingly searching for a ‘home from home’ experience which is why short term rentals, which offer a kitchen so they can cook for themselves, and a lounge to chill out are becoming so popular.

We think this opens up a huge opportunity in the Build to Rent (BTR) sector, which has already seen a massive upturn in popularity.

What’s driving the BTR boom?

A survey from international real estate consultancy Savills, which focused on the UK, said a shortage of rental property was responsible. The firm also attributed the boom to the surge in buy to let activity in recent decades.

Clearly that there is a growing opportunity for investors in the BTR market, especially in the UK where Savills noted national average rental growth of more than 7% in 2021.

Developers and investors are already piling in to take advantage of high yields. The challenge is that most of them would do way better if they partnered with innovators in property management.

How to improve the management of flex space

All too often, developers opt for traditional property managers who have little or no experience in the flex sector. Property managers charge fees based on a proportion of the rent. They oversee and manage the day-to-day running of the property, collecting rent, arranging repairs and maintenance, and filling empty units. But in the fast-moving world of short-term rentals, they are ill-equipped to flex their working practices to meet the needs of this agile sector.

The real winners in the BTR sector will be those developers and investors that realise occupiers in flex properties want everything to be done for them, with minimal contact with a management company – which is not only expensive but also time-consuming. They want their queries answered instantly and the use of intelligent technology is the only way to do this.

Imagine a situation where a tenant has problems gaining access to their apartment or managing energy consumption. They are unlikely to have instant access to someone who can fix the problem, and they will have to wait. This is not optimum for the occupier, the property manager or the investor, or the developer. Each party gains from a more efficient tech solution that can provide instant answers. The occupiers will be happier, making them more likely to stay on. There will be cost and efficiency benefits for everyone in the supply chain, from the developer and the investor to the property manager and occupant.

Operational excellence is integral to successful property management and high-return investments. Successful property management, using smart technology, means happy investors and developers who will be able to sell on their schemes quickly and move on to the next.

Nowhere is this more the case than in the fast-paced and rapidly growing short-term and flexible rental markets. Technology is changing the nature of property management – driving innovative efficiencies to deliver a first-rate experience for occupiers at a lower operational cost for managers.

Those developers and investors that embrace the advantages of a tech solution will have the most to gain in this fast-moving sector.

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