KUALA LUMPUR – Developers are not the only ones affected by the overhang of strata developments (completed unsold units) as the situation has led to property managers finding it tough to collect service charges.
Malaysian Institute of Professional Property Managers (MIPPM) president Sarkunan Subramaniam said the issue of unsold units has created a “havoc” of sorts and affected efficiency as developers are seeing their cash flows being dragged down.
“Currently, there are situations where 30-40% of condos we manage are unsold. If the units are empty service charges have to be paid … and who have to pay service charges … it is the developers, and it ends up that developers don’t pay the service charge because they also have cash flow problems,” he told reporters at a media briefing held in conjunction with MIPPM’s 2017 conference today.
He added that there are instances of developers trying to put their properties on the market with lower service charges in order to attract buyers.
“The worst part is, to sell the property, some of them price the service charge lower in order to attract buyers,” he said.
Meanwhile, on a separate note, Sarkunan told SunBiz in his capacity as the managing director of Knight Frank Malaysia that the oversupply in office space has led to rent in new buildings going down and encouraging tenants in old and unrefurbished buildings to move there, therefore transferring the glut to these buildings.
“Grade A or MSC-status buildings have positive absorption, from there you can infer that the glut is actually being seen at the Grade B buildings which are old and haven’t been refurbished, that is where the glut is,” he said.
“When it comes to new buildings, yes, there is an oversupply but they are the ones who are absorbing all the tenants who are coming from secondary buildings, because rents are coming down,” he added.
On another note, the creation of the Register of Property Managers under the Board of Valuers, Appraisers and Estate Agents Malaysia is a move on the government’s part to regulate and ensure that only competent property managers are allowed to practise.
Property managers with sufficient experience and competency have 12 months to register from Jan 1, 2018. There are roughly 20,000 buildings in need of property managers across the country.
MIPPM also noted that the adoption of technology among property managers is still low despite it being a useful job enhancer. The low adoption is attributable to lack of understanding and resistance to change on the part of property managers.