8155.0 - Australian Industry, 2016-17 Quality Declaration 
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 25/05/2018   
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RENTAL, HIRING AND REAL ESTATE SERVICES, 2016-17


INTRODUCTION

As part of the Economic Activity Survey (EAS), the ABS collects detailed information from a rotating program of industries. For 2016-17, the EAS collected additional information from Australian businesses/organisations classified to the Rental, hiring and real estate services division of the Australian and New Zealand Standard Industrial Classification, 2006 edition (ANZSIC) (cat. no. 1292.0). This included the following subdivisions:
  • Subdivision 66: Rental and hiring services (except real estate)
  • Subdivision 67: Property operators and real estate services

This page complements the 'Rental, hiring and real estate services' data cube available under the Downloads tab, which presents detailed industry information for key data items, and summary data by business size and at the state and territory level. All data are reported in current prices. Historical figures mentioned in the text can be found in the ‘Australian industry by subdivision’ data cube.

The following table provides key figures for the financial and economic performance of the businesses/organisations classified to Rental, hiring and real estate services division by ANZSIC class for 2016-17.


KEY FIGURES, RENTAL, HIRING AND REAL ESTATE SERVICES, 2016-17

ANZSIC Class
Employment at
end June
Wages and
salaries
Sales and
service
income
EBITDA(a)
Industry
value
added
Capital
expenditure
Wages and
salaries
per
employee

no.
$m
$m
$m
$m
$m
$'000

6611 Passenger car rental and hiring
9 686
544
3 217
913
1 592
1 877
np
6619 Other motor vehicle and transport equipment rental and hiring
^7 377
370
2 577
^876
^1 340
^868
np
6620 Farm animal and bloodstock leasing
np
np
np
np
np
np
np
6631 Heavy machinery and scaffolding rental and hiring
22 056
1 436
8 054
^2 369
4 157
^1 135
71.5
6632 Video and other electronic media rental and hiring
np
np
np
np
np
np
np
6639 Other goods and equipment rental and hiring n.e.c
24 246
1 195
5 864
1 629
3 183
^1 038
55.3
6640 Non-financial intangible assets (except copyrights) leasing
^7 477
^421
4 463
^1 418
1 978
^236
67.5
6711 Residential property operators
49 962
1 177
20 061
8 317
11 094
^5 861
37.9
6712 Non-residential property operators
145 954
2 943
61 282
36 044
42 587
^34 677
44.0
6720 Real estate services
136 810
7 891
24 633
6 048
15 515
^1 658
62.0

Total Rental, hiring and real estate services
405 991
16 051
130 513
57 645
81 562
^47 372
55.2

^ Estimate has a relative standard error of 10% to less than 25% and should be used with caution
np not available for publication but included in totals where applicable.
(a) Earnings before interest, tax, depreciation and amortisation.
Source: Australian Industry, 2016-17 (cat. no. 8155.0)


SUMMARY OF FINDINGS
  • Overall the Rental, hiring and real estate services division experienced moderate growth across key estimates in 2016-17, with an increase of 5.3% ($4.1b) in industry value added (IVA) and 3.8% ($4.8b) in sales and service income. Rent, leasing and hiring income was the industry’s largest source of sales and service income at $74.7b (57.2%).
  • The Rental, hiring and real estate services division remained highly profitable. Operating profit before tax (OPBT) increased 11.7% to $71.7b in 2016-17, making the division the top contributor for Total selected industries (see Endnote 1). Additionally, earnings before interest, tax, depreciation and amortisation (EBITDA) increased 6.4% to $57.6b, making it the second top contributor behind Mining.
  • The Rental, hiring and real estate services division is dominated by the Property operators and real estate services subdivision, which accounted for 84.8% of the division's IVA in 2016-17. Residential property prices grew 10.2% nationally over the 2016-17 financial year, with stronger results recorded in Sydney and Melbourne. However, at the class level Non-residential property operators, which includes businesses that rent or lease commercial, industrial or retail properties, dominated. The strongest employment growth in 2016-17 came from service based industries, which in turn increased demand for office space.
  • The Rental and hiring services (except real estate) subdivision, while smaller in contribution, indicated growth in sales and service income for the first time since 2012-13.


Graph Image for Rental, hiring and real estate services, Key data by ANZSIC subdivision, 2006-07 to 2016-17

Footnote(s): (a) Includes working proprietors and partners of unincorporated businesses; (b) Includes income from rent, leasing and hiring and royalties; (c) Includes capitalised wages, salary sacrificed earnings and remuneration in the form of share based payments and stock options; excludes the drawings of working proprietors.

Source(s): Australian Industry (cat. no. 8155.0)




SUBDIVISION 66 RENTAL AND HIRING SERVICES (EXCEPT REAL ESTATE)

The Rental and hiring services (except real estate) subdivision consists of businesses who rent, lease or hire assets (both tangible and intangible) without an operator. However, businesses within this subdivision engaged in more diverse activities, with almost half of their reported sales and service income sourced from outside the main activity in 2016-17.

Heavy machinery and scaffolding rental and hiring was the largest class within this subdivision across most measures, followed by Other goods and equipment rental and hiring n.e.c, which includes businesses mainly engaged in hiring, leasing or renting items not elsewhere classified, such as, electric and electronic appliances or sports and recreation equipment.

Employment

There were 73,265 people employed in the Rental and hiring services (except real estate) subdivision in Australia at the end of June 2017, a decrease of 1.1% compared to June 2016. The largest employing classes were Other goods and equipment rental and hiring n.e.c. (24,246 people) and Heavy machinery and scaffolding rental and hiring (22,056 people). Employment is taken at a point in time in June and can be affected by seasonal factors, whereas wages and salaries are in respect of the entire financial year.

Income

Sales and service income for the Rental and hiring services (except real estate) subdivision was $24.5b in 2016-17, with rent, leasing and hiring income representing only 53.1% ($13.0b) of that amount. Income from services, which included income from royalties, franchise fees, delivery fees, installation and repair and maintenance services, comprised 30.1% ($7.4b). Retailing and wholesaling activity was reflected in sales of goods which accounted for 16.7% ($4.1b) of sales and service income.

Businesses in the Heavy machinery and scaffolding rental and hiring class accounted for 32.8% ($8.1b) of sales and service income for the subdivision, predominantly servicing the construction and mining and resources industries. Other goods and equipment rental and hiring n.e.c. followed at 23.9% ($5.9b), and Non-financial intangible assets (except copyrights) leasing at 18.2% ($4.5b). The remaining four classes together accounted for only 25.1% ($6.2b) of sales and service income for the Rental and hiring services (except real estate) subdivision.

Expenses

Total expenses for the Rental and hiring services (except real estate) subdivision were $21.6b in 2016-17, an increase of 2.1% ($438m) compared to 2015-16. Rent, leasing and hiring expenses and payments to consultants, contractors and subcontractors were significant in the subdivision. These costs were included in other selected expenses which accounted for 41.6% ($9.0b) of total expenses in 2016-17. Selected labour costs and purchases of goods and materials represented 20.7% and 18.6% of total expenses respectively.

Wages and salaries

Wages and salaries for the Rental and hiring services (except real estate) subdivision were $4.0b with the top contributors consistent with employment. Wages and salaries per employee for the subdivision were $61,800, with the Heavy machinery and scaffolding rental and hiring class recording the highest level at $71,500.

Profit measures

EBITDA totalled $7.2b in 2016-17 for the Rental and hiring services (except real estate) subdivision, an increase of 8.2% ($551m) from the previous twelve months. OPBT also experienced an increase of 5.8% ($256m). The Heavy machinery and scaffolding rental and hiring class was the top contributor for EBITDA accounting for 32.7% ($2.4b), while Non-financial intangible assets leasing was the biggest contributor to OPBT at 33.7% ($1.6b). The profit margin for the Rental and hiring services (except real estate) subdivision increased slightly from 18.6% in 2015-16 to 19.0% in 2016-17.

Graph Image for Rental and hiring services (except real estate), Key data by ANZSIC class, 2016-17(a)

Footnote(s): (a) Data for Video and other electronic media rental and hiring and Farm animal and bloodstock leasing are not available for publication, but have been included in totals where applicable; (b) Wages and salaries per employee for Other motor vehicle and transport equipment rental and hiring, and Passenger car rental and hiring are not available for publication, but have been included in totals where applicable; (c) Includes working proprietors and partners of unincorporated businesses; (d) Includes capitalised wages, salary sacrificed earnings and remuneration in the form of share based payments and stock options; excludes the drawings of working proprietors; (e) Includes income from rent, leasing and hiring and royalties; (f) Includes value of capital work done for own use; (g) Employee estimates used in this ratio exclude working proprietors and partners of unincorporated businesses.

Source(s): Australian Industry (cat. no. 8155.0)




SUBDIVISION 67 PROPERTY OPERATORS AND REAL ESTATE SERVICES

The Property operators and real estate services subdivision consists of businesses who rent, lease, sell or manage property assets. Reflecting the dominance of this subdivision, it accounted for 81.2% of the Rental, hiring and real estate services division's total sales and service income.

The Non-residential property operators class was the largest contributor across all key data items with the exception of wages and salaries, where it was supplanted by Real estate services.

Employment

At the end of June 2017 there were 332,726 people employed in the Property operators and real estate services subdivision in Australia, an increase of 0.5% compared to June 2016. The largest employing classes were Non-residential property operators (145,954 people) and Real estate services (136,810 people). Employment is taken at a point in time in June and can be affected by seasonal factors, whereas wages and salaries are in respect of the entire financial year.

Income

Sales and service income for the Property operators and real estate services subdivision increased by 3.9% to $106.0b in 2016-17, with rent, leasing and hiring income representing 58.2% ($61.6b) of that amount. Income from services comprised a further 34.7% ($36.8b) and included real estate agent fees (commissions from sales or lease of property or income from property management services), caravan park fees and body corporate fees. Businesses in the Real estate services class accounted for 57.8% of income from services for the subdivision and reported the majority of their sales and service income in this category.

The Non-residential property operators class accounted for 57.8% of sales and service income, followed by Real estate services (23.2%) and Residential property operators (18.9%).

Total income for the Property operators and real estate services subdivision ($137.3b) was boosted by revaluations of assets owned, profits from the sale of property and property trust distributions, which was reflected in other income of $28.8b for 2016-17.

Expenses

Total expenses for the Property operators and real estate services subdivision decreased by 0.9% to $70.1b in 2016-17. Expenses for the subdivision reflected the importance that consultants, contractors and subcontractors play in this industry. These costs were included in other selected expenses which represented 50.2% ($35.2b) of total expenses in 2016-17, with the next biggest contribution from selected labour costs at 18.8% ($13.2b). Interest expenses in this industry were high, accounting for 14.6% ($10.3b) of total expenses, compared to 2.3% for Total selected industries.

Wages and salaries

Wages and salaries for the Property operators and real estate services subdivision were $12.0b in 2016-17 with the biggest contribution from the Real estate services class (65.7%), which is consistent with its activity, earning income from providing services rather than renting, leasing and hiring. Wages and salaries per employee for the subdivision was $53,300, with the Real estate services class recording the highest level at $62,000.

Profit measures

EBITDA rose at a more moderate rate than OPBT, increasing by 6.1% to $50.4b, in comparison to OPBT which increased by 12.1% to $67.1b in 2016-17. This was in part due to asset revaluations and profits from sales of property which were included in other income and OPBT but were not in scope of EBITDA. Businesses in the Non-residential property operators class contributed 71.5% and 70.7% to EBITDA and OPBT respectively for the Property operators and real estate services subdivision.

Graph Image for Property operators and real estate services, Key data by ANZSIC class, 2016-17

Footnote(s): (a) Includes working proprietors and partners of unincorporated businesses; (b) Includes capitalised wages, salary sacrificed earnings and remuneration in the form of share based payments and stock options; excludes the drawings of working proprietors; (c) Includes income from rent, leasing and hiring and royalties; (d) Includes value of capital work done for own use; (e) Employee estimates used in this ratio exclude working proprietors and partners of unincorporated businesses.

Source(s): Australian Industry (cat. no. 8155.0)




FURTHER ANALYSIS

The following sections discuss estimates suitable for analysis only at the division and subdivision level.

Business size

The Rental, hiring and real estate services division is characterised by the contribution of micro businesses (employing 0-4 people). In 2016-17 micro businesses contributed the majority of total employment in the division (55.2%). This was greatly influenced by the Property operators and real estate services subdivision where micro businesses accounted for 60.6% of the subdivision's total employment as a result of a large number of working proprietors and partners, body corporate/strata representatives and trustees, which are mostly represented in the micro business size category.

Although accounting for 55.2% of Rental, hiring and real estate services total employment, micro businesses only comprised 21.2% of the division's $16.1b total wages and salaries. This is the result of working proprietors and partners of unincorporated businesses relying on drawings of profits as a source of income, rather than wages or salaries.

Micro businesses were also the largest contributors to the division's total income at 65.1%, and with total expenses lower due to lower wages and salaries, their profit margin was higher (67.6% compared to 55.0% for the division). Micro businesses accounted for 77.8% of the division's OPBT.

Graph Image for Rental, hiring and real estate services, Key data by subdivision and business size, 2016-17

Footnote(s): (a) Includes working proprietors and partners of unincorporated businesses; (b) Includes capitalised wages, salary sacrificed earnings and remuneration in the form of share based payments and stock options; excludes the drawings of working proprietors; (c) Includes income from rent, leasing and hiring and royalties;

Source(s): Australian Industry (cat. no. 8155.0)



Capital expenditure

The Rental, hiring and real estate services division is capital intensive, accounting for 19.5% ($47.4b) of total capital expenditure for Total selected industries in 2016-17, however the biggest expenditure by asset type differed between subdivisions.

The Rental and hiring services (except real estate) subdivision's total capital expenditure increased by 20.7% to $5.2b in 2016-17. This largely related to investment in plant, machinery and equipment, which was 86.0% ($4.5b) of total capital expenditure.

In contrast, for the Property operators and real estate services subdivision, total capital expenditure decreased by 1.0% to $42.2b in 2016-17. The majority (68.7% or $29.0b) of this amount was investment in dwellings, other buildings and structures.

States and territories

New South Wales (NSW), Victoria, South Australia, Tasmania and the Australian Capital Territory all experienced positive growth in employment, wages and salaries, and sales and service income for the Rental, hiring and real estate services division in 2016-17. Queensland showed declining division wages and employment, while Western Australia and Northern Territory declined across all three items at the division level.

In 2016-17 NSW was the largest source for employment, wages and salaries, and sales and service income within the Rental, hiring and real estate services division. NSW accounted for 42.4% ($55.3b) of sales and service income, 36.9% ($5.9b) of wages and salaries and 36.0% (146,042 people) of employment at end of June 2017 for the division. Victoria and Queensland were the next largest for all three measures.

Tasmania had the lowest average wages and salaries per person employed ($33,100 per person employed) while Western Australia had the highest ($42,700 per person employed) (see Endnote 2).

NSW was also the strongest contributor in all three measures for both the Rental and hiring services (except real estate) and Property operators and real estate services subdivisions.


QUALITY INDICATORS

An expanded sample of 2,629 businesses/organisations classified to ANZSIC Division L Rental, hiring and real estate services, were selected to receive an extended EAS questionnaire. Of those businesses surveyed and found to be operating during the 2016-17 financial year, 88.4% responded. Data were imputed for the remaining 11.6% of businesses, accounting for 9.9% of total income for the Rental, hiring and real estate services division. For more information please see the Explanatory Notes and the Data Quality technical note.

The Rental, hiring and real estate services component was fully integrated with EAS, which means that other data cubes in this release which contain estimates relating to the Rental, hiring and real estate services division are consistent with the 'Rental, hiring and real estate services' data cube. Finer level estimates produced from collection source data can be requested, subject to confidentiality and sampling variability constraints.


ENDNOTES

1. Total selected industries in scope of the EAS exclude Financial and insurance services and most of the General government sector. For more information on scope and coverage see the Explanatory Notes. For more information on the data item definitions also see the Explanatory Notes.

2. Note that average wages and salaries have been calculated using wages and salaries for the full financial year 2016-17 which exclude the drawings of working proprietors and partners of unincorporated businesses, whereas employment is a point in time estimate at June 2017 and includes working proprietors and partners, so the ratio should be used with caution.