I was exploring the RAAS RIGHTS website the other day and stumbled on to the button that led me to the archived issues of the RAAS Report. I was astounded to find that the very first RAAS Report was published as long ago as August 2004. How time flies! I was further astounded to find that a press release from a senior Queensland Government Minister, which I referred to in that RAAS Report of August 2004, promising to fix a real problem for Queensland RUM's, was still unresolved in December 2008! The wheels of change move slowly.

The reference was to the (then) new laws that were to stop outside real estate agents using the ownership information on the Valuer-General's Database (RP Data, PDS Live, etc) to deluge your investor owners with unsolicited marketing offers and materials.

To quote Minister Stephen Robertson in 2004: "We intend to amend the law to create a specific criminal offence for this direct marketing practice, coupled with investigative powers to take action where complaints are received. Effective penalty provisions will be included in the new legislation."

How much illegal marketing mail have your investor owners received from real estate agents in the last three months? This is the very same minister who is now entrusted with fixing the public hospital system! I would advise my readers to keep taking their vitamins and not get sick! It always seems that the more politicians tell us that things will change, the more they remain the same!

So, what has changed since August 2004? Well, the price of real estate and the level of management rights multipliers, for a start.

In the RAAS Report of October 2004, I wrote that complexes of $1,000,000+ were selling readily at multipliers of 5 to 5.3 times Nett Profit. Since those heady days, on-site managers have firstly smiled as the value of their real estate soared, but then frowned as increased interest rates pushed down the value of multipliers.

Fortunately, we now see interest rates heading south again, but the current uncertainty (or GFC - Global Financial Crisis - as our politicians like to call it), is keeping a tight lid on the level of sales and the prices being achieved. On the positive side, rents in permanent complexes have escalated rapidly, lifting the bottom line for most complexes and enabling overall capital values to hold their own.

Also positive for our resorts, is the devaluation of the Oz dollar, which should give a boost to domestic tourism. Early in 2008, I spent some time in Europe when the Australian dollar was worth almost one US dollar. It is now worth only 62 US cents! Needless to say, I will not be sipping champers on the Champs Elysees on Boxing Day 2008; I will be having the lunch special at the Alexandra Headland Surf Club!

So what of the next twelve months? I am bullish about the future! I think the doom and gloom (as far as our industry in Queensland is concerned), has been overdone.

I think demand for good management rights businesses will increase in the near future.

One thing that will help will be an increase in the potential pool of buyers. As the general Australian economy feels the downturn in the first half of 2009, there will be quite a few retrenched middle management types who (with redundancy dollars in pocket), will be looking for a life-style change. When you have just been "shunted" (or should that be "shafted") by the corporation to whom you have given twenty years of dedicated service, the prospect of being your own master running a good management rights business is a tantalising one indeed! Putting my tongue firmly in my cheek, I would suggest that the potential influx of suddenly unemployed bankers alone, would give our industry a substantial leg-up!

Whatever 2009 may hold, the team at the RAAS Group wish you all the very best for the 2008 Christmas season.

May those of you in holiday complexes enjoy 100% occupancy with excellent weather; those of you in permanent complexes enjoy putting your feet up for the week; and those of you thinking about joining our industry, make this Christmas the time for decision!

Merry Christmas to you all!

If you would like to comment on anything you have read in The RAAS Report, please write to PO Box 1325, Sunnybank Hills, Qld 4109 or send an email to mike@raas.com.au.

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