Copyright: David Lawson
Published: Property Week 2007
Until recently only sophisticated property investors looked outside the UK. It was simply too complex - not just finding the right product but managing all the quirks and variations across different countries. German landlords, for instance, are responsible for clearing snow. Italians have to compute inflation to index rents. Lease structures vary, and every country treats taxes and service charges differently.
But the decline in UK yields has sent investors scurrying abroad for better deals, only to find their management software often cannot cope. Information may come flooding in from a range of agents in different languages via a blizzard of spreadsheets, then need retyping to match whatever format is used for analysis. It all takes time, and errors are inevitable.
British investors and agents predominately use British software because our market is so complex that outsiders have found it difficult to establish a foothold, says Chris Lees, executive director at consultancy Calvis. But this is not always geared to the variations found abroad. Even large players rely on a variety of alternatives in overseas offices, and like the legion of newcomers, would prefer a consistent approach where all offices use the same systems.
Some are opting for programs by groups like Yardi and Intuit designed to work in any country once tweaked to local demands. Teesland iOG, the property fund and asset management company, is rolling out Yardi’s Voyager International across ten European offices. ‘A complicated job that used to take three and a half days has become a simple twenty minute operation,” says Mark Bowden, divisional director of European asset management, who handles a highly management intensive portfolio comprising 70% multi-let light industrial units and 30% non-CBD office buildings.
But this approach can have a downside. Adjusting to the special needs of each country or client takes time and money, says Lees. One British market leader has now spent £1m developing an ‘off the shelf’ package to bridge this gap. Trace, best know for the Tramps software which claims 70% of the top end of the UK property management market, is launching an integrated system for overseas property.
‘We recognized from client feedback there was a great need for extending outside the UK,’ said sales director Graham Davies. ‘Cross-border data can be a nightmare to manage and analyse, not only because of the complications of local legal requirements but because of the complexity of controlling and merging that data to suit a UK system.’
Business advisers and clients have welcomed the move. ‘You can buy this off the shelf and it can be put in quickly and painlessly,’ said Andrew Waller, a partner at Remit Consulting. ‘People don’t want to go through a long implementation process.’
Paul Harding, chairman of DTZ Property Management, is already using Trace’s software in the Middle East. ‘A central, integrated method was needed to give the flexibility to make the most routine investment decisions and judgements,’ he said.
Trace admits some software is already able to handle international investment but says most is very complex, unique to each investor and costly to configure and install. ‘It is a hugely expensive and time consuming process,’ says Davies. ‘And at the end of all that, what have you got? A bespoke system, developed at your expense with you carrying all the risk. Because it’s bespoke you will have a difficult and equally laborious upgrade path and because it is bespoke, support will not be easy. Above all, does the system work as well as you hoped?
‘An average installation can take months of consultancy and more months to complete, involving a huge amount of time, effort and money. Users are footing the bills for all this - over and above the core system originally paid for.’
Lees suggests the choice is much like buying a new house. You rely on builders to put them together, then scout around and pick the one you want, tweaking it to suit by choosing colours, carpets and furniture. That is the equivalent of a software package. A bespoke system on the other hand is more like commissioning an architect to design and build a house from scratch.
Package or Bespoke? Trace outlines the stages to set up a system tailored to the needs of as single client with international property holdings: