What is net migration and why should you monitor it?
In Homepal we have over 5000 key figures that can be combined in different ways. So it's not easy to distinguish exactly what everything means. Today we take a deep dive into net migration.
What is net migration?
Net migration shows the difference between the number of arrivals and departures during the specified period.
What does net migration show?
The key figure indicates whether there has been an increase or decrease in the number of tenants within a stock over a given period of time. It captures changes in the number of tenants by comparing the total number of tenants moving in with the total number of tenants moving out.
How should I interpret the key figure?
A positive net migration figure indicates an increase in the number of tenants, while a negative figure indicates a decrease. This is valuable for real estate companies as it provides insights into the demand for rental properties and market developments and helps to make informed decisions on real estate strategy and resource allocation.
How is net migration calculated?
Number of signed contracts - Number of terminated contracts = Net
* Includes only those agreements where the start or end date falls within the specified time period.
Why is it important to monitor?
Monitoring the KPI is important for a real estate company for several reasons:
Market analysis: By monitoring net move-in, the real estate company can gain a better understanding of market trends and demand for housing in its area. A positive net move-in figure can indicate growing demand and opportunities for expansion or development of new properties.
Business strategy: The information on net migration can be valuable to the real estate company when designing their business strategy. It can help them decide whether they should invest in building more homes or whether they should focus on retaining existing tenants.
Resource allocation: Net migration provides insights into the need for maintenance and improvements to existing properties. An increase in occupancy may require more resources to manage and maintain the properties, while a decrease in occupancy may signal that some properties need to be upgraded or re-marketed.
Long-term planning: Net occupancy also provides information on long-term trends. If a real estate company sees a steady increase in net migration, it can be an indication of a stable and growing real estate portfolio.
In summary, the metric helps the real estate company to make informed decisions on market strategy, resource allocation and long-term planning. It provides an indication of whether the real estate portfolio is growing or declining and can be crucial to achieving profitable results and sustainable growth.
