Professional Group responds to changing requirements for asset managementESG, digitalization and clear performance demarcations are coming more into focus
The Professional Group Asset Management (PGAM) of RICS Germany has comprehensively revised its “Asset Management Service Specification ” and published the third updated version. The established industry work, which was first published in 2012, takes into account the changed framework conditions in the real estate market and creates an up-to-date basis for the definition, commissioning and remuneration of professional asset management services.
The aim of the PGAM is to formulate a practical and transparent service profile for real estate asset management and thus to provide orientation for both clients and asset managers. In addition to the description of specific services, the publication contains recommendations on remuneration models and empirical information on customary remuneration ranges.
“Asset management has developed considerably in recent years. Today, the requirements go far beyond the classic economic management of a property. Sustainability, regulation, data quality and digitalisation intervene directly in strategic and operational decisions. With the new edition, we are mapping this changed task in a practical way and at the same time creating more clarity about which services professional asset management encompasses,” says Alexander Lickfett FRICS, Head of PGAM and Managing Director of SPACT GmbH.
ESG becomes an integral part of asset management
One focus of the revision is on sustainability and ESG. In contrast to an isolated additional field of activity, PGAM sees ESG as a cross-cutting issue that affects the entire life cycle of a property and key value-added processes of a real estate investment. Accordingly, a separate ESG module was deliberately omitted. Instead, sustainability aspects are integrated into the individual service areas. They are already centrally anchored in the “Strategy” module, for example in the areas of investment, portfolio and property strategy.
“Sustainability is no longer an additional task that stands in addition to the actual asset management. ESG requirements influence strategies, business plans, investment decisions, reporting and the further development of portfolios. That’s why it was important to us to map these topics where they actually have an impact in practice across the entire service profile,” explains Sandy Bierwirth-Zeussel MRICS, Deputy Head of PGAM and Managing Director at RMC Risk Management Consulting GmbH
20 modules create transparency about services and interfaces
The list of services structures the range of tasks of asset management into a total of 20 modules. Ten of these are defined as basic modules and usually represent the original service profile. These include strategy, business plan and budget, controlling, reporting, data and document management, the selection and management of service providers, property and tenant management, receivables and liquidity management as well as letting. Supplementary modules include, for example, acquisition, financing, research, risk and compliance management, construction management, refurbishment and project development, property valuation and sales.
The modular structure enables clients and contractors to precisely define the scope of services and responsibilities. Within the modules, a distinction is also made between basic and additional services as well as between asset and portfolio level. In particular, this is intended to make it easier to differentiate from related disciplines such as property management and facility management. RICS defines asset management as the responsible strategic and operational management of all measures that influence returns and risks at property, portfolio and company level over the entire life cycle of a property.
Digitization becomes part of professional management
Digital transformation is also given greater consideration in the new edition. According to PGAM, data and document management in particular are becoming increasingly important. Appropriate, secure and traceable collection, processing and storage of data are increasingly forming the basis for efficient asset management. The specifications also dedicate a separate chapter to digitization. This is not only about the use of new IT systems, but also about digitally oriented processes, data quality and security, roles and authorizations, and the integration of AI into work organization.
Lickfett: “Digitization is not an end in itself. It is crucial that data is reliably available and that it can be used to make better and faster decisions. AI will also change the way work is organized in asset management. However, the prerequisite for this is reliable data, clearly defined processes and clear responsibilities. This is exactly the connection we want to make with the specifications.”
Orientation also in remuneration and contract drafting
In addition to the actual range of services, the publication deals in detail with the remuneration of asset management services. It presents different remuneration models, gives recommendations on their application and contains information on customary remuneration ranges. The list of services is thus intended to support not only the definition of the scope of services, but also tenders, contract negotiations and the design of appropriate remuneration. The new edition is supplemented by legal information on asset management contracts.
“Our aim was not to present a rigid standard contract or a conclusive checklist,” says Bierwirth-Zeussel. “Rather, the bill of quantities is intended to create a common language between clients and asset managers. The more clearly services, interfaces, responsibilities and remuneration are defined, the better expectations can be compared and services can also be assessed qualitatively.”
Conclusion: Asset management is a central control discipline
The third edition of the bill of quantities shows how much the job description of the asset manager has changed. It is no longer just the economic optimisation of individual properties that is in demand. Today, asset managers have to bring together strategic, regulatory, sustainability-related and digital requirements and translate them into concrete measures. The new list of services is intended to provide orientation and at the same time contribute to a common understanding of what professional asset management has to do today.
Here is the link to the Asset Management Germany service specification: https://spact.de/de/download.html
