Property Management: 5 Ways to Reduce Operational Costs

According to the Government, Hong Kong’s Statutory Minimum Wage will be raised from HK$40 to HK$42.1 per hour starting May 1, 2025. While this adjustment aims to improve the livelihoods of workers, it will inevitably lead to higher operational costs for businesses, including property management companies. These companies are labor-intensive, relying on staff for tasks such as maintenance, tenant screening, rent collection, and facility management. The increase in the minimum wage will directly impact payroll expenses, which are a significant portion of operational costs. Every dollar a property management company saves is a dollar that flows to its bottom line. Therefore, mitigating operational costs is important if the company wants to enhance its bottom-line performance.

To remain profitable, property management companies must find innovative ways to reduce costs without compromising service quality. By embracing Property Technology (PropTech), property management firms can not only offset these rising costs but also enhance efficiency, sustainability, and tenant satisfaction. Today, we will outline several ways for property managers to minimize operational costs on a long-term basis.

1. Energy-efficient Workplace

Energy efficiency not only reduces electricity bills but also supports sustainability and ESG (Environmental, Social, and Governance) goals. With proper facility management, energy consumption in an office can be effectively reduced to offset high energy costs. Property management companies can establish green management practices in the workplace, such as paper-saving initiatives, energy conservation, indoor air quality control, clean recycling programs, and green procurement. To maximize the benefits of embracing sustainability in the office, advanced energy-efficient systems and technologies, such as lighting controls and smart thermostats, can be implemented to achieve higher energy efficiency.

2. Regular Inspections and Preventive Maintenance

As the saying goes, “Prevention is better than cure.” This principle applies to property management as well. Buildings need to be proactively maintained to keep them operating efficiently. Preventive maintenance, which focuses on preventing failures in building elements, facilities, and systems through regular inspections and timely repairs, is more cost-effective than corrective maintenance, which targets detected faults in a building. Additionally, the Common Law requires owners to carry out regular maintenance work for their buildings.

3. Payment Automation

Traditional property management relies heavily on manual processes that are time-consuming and expensive, not to mention the potential for human error. Automating the entire payment process—from invoicing to payment collection—can address these issues. By eliminating manual processes, payment process automation ensures accuracy, efficiency, and data visibility, leading to increased productivity and lower operational costs. Moreover, digitizing the payment process helps enhance tenant satisfaction, as it allows tenants to pay at their convenience. Some systems can even send automatic reminders to alert tenants of payment due dates.

4. Thorough Tenant Screening

By thoroughly screening tenants, property management companies can mitigate the risk of property damage and overdue or unsettled payments, thereby ensuring long-term profitability. Building loyalty with creditable and qualified tenants can increase the occupancy rate, preventing losses from bad debts, operating expenses, and taxes associated with finding replacements.

5. Automated Rental Process: Property Management Software

Property management tasks are repetitive and time-consuming, requiring significant manpower to handle. Property managers can leverage property management software to automate and streamline the entire rental process, reducing labor costs and enhancing productivity. It is worth noting that some property management software enables property managers to oversee, track, and organize day-to-day income and expenses with ease, allowing them to effectively control budgets and manage cash flow.