SAP Real Estate Management Services

Flexible SAP Real Estate Management (SAP RE-FX)

SAP Flexible Real Estate Management (SAP RE-FX) is a full featured and integrated solution enabling the effective management of real estate and greater insight into one’s real estate portfolio. The application addresses all phases of the real estate life cycle, including real estate acquisition or disposal, portfolio management, and property and technical management.

SAP real estate management module deals with the management of companies’ real estate assets. Its scope includes the management of both privately owned and leased out or leased properties. It supports the collection and allocation of real estate-related costs, such as rent, utilities and individual costs, the invoicing of revenues (which can be a square meter-based or turnover-based fee, currency-based calculation, flat-rate settlement), thus the efficiency calculation as well.

In addition, it enables the utilization of properties (internal usage, vacancy, or rental) by displaying occupancy data and by logically and physically mapping the property. Its dedicated objects, such as indexing, extension, or termination, covers the entire life cycle of the contract.

SAP RE-FX provides a very close integration with SAP Controlling modules.

The main requirements of any real estate solution

Management of Real Estate

The key objective of any real estate actor would be to manage the real estate efficiently, in a cost-effective and optimal way. The selected real estate solution should help in achieving this objective. A complete view of master data, from location and size to value and usage, has to be provided so as to manage and maintain it. The SAP RE-FX solution provides a dual view of master data, both architectural view and usage view, to enable the management of all types of real estate objects, like a business entity, land, building, or rental object, i.e., pooled space, rental space, or rental unit. The assignment of various real estate objects to RE-FX master data is simple in nature.

Contract Management

The management of contracts with different stakeholders is an essential activity from a legal and statutory perspective. Real estate players deal with different vendors from whom they take a property on lease, and various customers to whom property is leased out. An IT solution should enable the effective management of these contracts to ensure legal, accounting, and statutory requirements are met. SAP RE-FX covers multiple business scenarios where contracts such as lease-in, lease-out, security deposit, vendor and customer contract, or GL contract are required, and such contracts can be configured in the system easily.

Space Management

Space management forms a key part of any real estate business. The real estate actor should have complete details of architectural hierarchies and structures, usage considerations, and technical facilities before planning to rent out property. The IT solution must have the capability to capture and provide these details. SAP RE-FX provides options to capture the complete details of the property, which ensures the optimum utilization of the space.

Lease-in, lease-out

The lease-in and lease-out process is one of the key operations in any real estate business. When a real estate actor takes land on rent from a landlord for a specific period, the process it is called a lease-in. The lease-out process is when the real estate actor rents out the space to their customer. The lease-in process enables a cash payment to the landlord and the accounting of expenses to the appropriate account, whereas the lease-out process lets you deal with cash flow from a tenant and the posting of income. The solution should be able to support both processes.

Reporting

Another requirement of any real estate actor is that of reporting. The reporting needs to be in categories such as operational, accounting, legal, and statutory reporting, including occupancy report, valuation report, report related to tax, days outstanding report, and so on. The solution should be able to cater to all such reporting requirements. For example, it should be able to generate an occupancy report that provides details of properties that are vacant as well as the vacancy duration to find reasons for the vacancy and take corrective action to avoid notional loss. SAP RE-FX caters to multiple business requirements by providing an exhaustive reporting system.

Challenges with existing real estate management solutions

The real estate industry may be divided into different segments, like commercial, residential, retail, and hospitality. Each of these business types has various business models, requirements, and challenges. A solution provider must understand the business dynamics and critical requirements of each of these types. Real estate solution implementation is not merely a technical initiative driven by the information technology department, but rather is a complete transformation initiative to be owned and driven by the entire organization.

As major real estate actors are aggressive in tapping the market, most of them handle several projects across the city and nation. Hence, it is impossible for them to keep track of the properties purchased and sold and the management or development of on-going projects in all locations.

Today, IT has transformed the way property business is done, and technology has provided tools to keep a check on all of their needs. Real estate solution providers have helped them to enhance the whole process through their innovative solutions. Also, there are several other solution providers that assist the real estate sector with their end-to-end support products. Such software helps their users to automate business workflows, building strong and everlasting relationships with existing and prospective customers.

However, a major concern for real estate players is the sustainability of IT systems, which are expected to meet business demands over a reasonable period. The challenge of higher IT infrastructure spends amid decreased budgets hampers enterprises from effectively responding to an evolving IT infrastructure.

Currently, real estate companies rely on various internal IT systems and product vendors to create new offerings and successfully run the business. This leads to maintenance overheads and an increased dependency on third-party products.

Currently, solutions are available in the market that address multiple requirements of the real estate industry, like accounts receivable, billing and invoicing, planning, reporting, expense management, and Customer Relationship Management (CRM).

But a single integrated solution addressing all the requirements of the industry is a must. There is a need for scalable ERP solutions with functionality designed to solve the specific business challenges of the real estate industry, with solutions tailored to every real estate market and meeting the complex requirements for retail (shopping malls and strip malls), franchises, commercial, and real estate investment trusts.

Existing SAP modules like Financial (FI), Project Systems (PS), and Sales and Distribution (SD) are capable to fulfill real estate requirements, but they are unable to specifically meet the needs of real estate businesses. SAP Asset Accounting captures details of assets owned by a company but does not specifically focus on real estate assets, i.e., land and buildings.

Businesses require detailed master data regarding land and buildings, with details like quality of land, value, architectural details, and measurements, which are provided in minute detail by SAP RE-FX. Containing not only the appropriate master data, but also contract processing, accruals and deferrals, rent adjustment, sales-based settlement, and so forth, the SAP RE-FX module is the perfect solution for the real estate industry. Real estate assets constitute a major component of the asset value of an organization and need to be monitored effectively. SAP RE-FX provides this with strong integration with the financial module.

Onespire Ltd.’s expertise with SAP RE-FX module

Our company’s real estate management experts deliver outstanding support to our clients in the implementation of SAP’s entire RE-FX portfolio. Previously we have successfully introduced RE-FX both to enterprises providing real estate management services and to companies “only” using real estates.

In addition, we have built interface connections with external CAFM (Computer Aided Facility Management) systems. Specifically, SAP uses the RE-FX-LA submodule to perform IFRS16 valuations.

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