Before the interest rate turnaround, rising property prices concealed inefficiencies and duplicate structures in property management, but now the high-cost pressure is forcing optimization. For example, services such as cleaning or maintenance are often tendered by several management levels in parallel and invoices run through unnecessary loops between facility, property and asset managers. The lack of digitalization exacerbates these problems by making it difficult to track maintenance measures. To reduce costs and increase efficiency, clear responsibilities, digitalization and a reorganization of tasks in the interests of investors and tenants are necessary.
But what exactly does fund management, asset management, property management and facility management mean? In this article, we would like to present the tasks of the individual management areas in detail and highlight the importance of understanding their differences.
1. Fund Management
Funds are managed by professional fund managers who make investment decisions within a defined framework and legal regulations. Funds can invest in a variety of investments such as equities, bonds, real estate and renewable energy. Successful fund management aims to minimize risks and achieve a reliable increase in value.
Fund managers are often specialists in certain types of investment, such as equity, bond, mixed and index funds. In the case of real estate funds, their responsibilities range from property selection, tenant search and maintenance to sales. They need excellent market knowledge and must anticipate future developments to recognize the optimal time to sell.
In the field of renewable energies, fund managers must consider political requirements and energy price developments. Their work is regulated by the German Investment Code.
2. Asset Management
Asset management focuses on the strategic asset management of real estate with the aim of achieving high returns and minimizing risks. Asset managers make investment decisions and manage the assets of their clients, usually institutional investors. Their tasks include the strategic planning and management of real estate investments, budget planning and control as well as decisions on maintenance and modernization measures. They are also responsible for communication and reporting to investors.
3. Property Management
Property management, on the other hand, focuses on the operational management of real estate. Property managers implement the strategy specified by the asset manager and take care of day-to-day management, maintenance and tenant satisfaction. This includes the monitoring and coordination of maintenance measures, rental management and property accounting as well as direct communication with tenants. Property Management focuses on the management of residential, commercial and industrial properties, including residential complexes, office buildings, shopping centers and factories.
Overall, asset management and property management share a few similarities: Both manage real estate on behalf of investors, act in both an advisory and decision-making capacity and perform planning, management and control tasks. However, the focus of asset management is on strategic asset management and investment decisions, while property management concentrates on operational implementation and management.
4. Facility Management
Facility management supports the functionality, safety and sustainability of buildings and infrastructure through services such as rental management, maintenance, energy management and emergency management. It includes hard FM, which focuses on physical assets, and soft FM, which covers tasks such as janitorial services and security.
Facility management is closely linked to asset management and property management. While asset management makes strategic decisions to increase value and property management ensures operational management, facility management focuses on practical implementation and maintenance. It supports the overarching goals of asset management by maintaining the physical infrastructure and optimizing the measures implemented by property management. In this way, all three areas work together to ensure that properties are managed efficiently and their value is maintained in the long term.
Optimization is the key
Kai Nelson Dreisigacker, Managing Director of Reax Advisory, is therefore calling for an end to duplication in real estate management. Before the interest rate turnaround, inefficient structures were concealed by rising property prices, but now processes need to be optimized.
There is great potential for savings in the areas of fund, asset, property and facility management. Dreisigacker suggests cutting at least one of these levels in order to reduce costs by 10% to 15%.
Services are often put out to tender in parallel, invoices are sent back and forth unnecessarily and maintenance measures are not systematically recorded. Three measures are crucial to solving these problems: digitalization and data sharing, clear responsibilities and a restructuring of tasks. Tasks that are closely related to the property should be taken over by the relevant party.
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References:
Euramco - Link
McMakler - Link
Zink - Link
Immobilienzeitung - Link
IBM - Link
MOM - Link
Studysmarter - Link