Strata Management Myths Part 1/2
"Has good property management preserved capital values & rents of 5* condominiums?
EdgeProp's article, “Pushing strata management to the next level', quotes it's ex chief editor Au Foong Yee : “....buying a property is not just about its usage and obvious functionality. The end-game of any property investment is its capital appreciation. And many have discovered the value growth of a piece of real estate is not based only on its location and its developer’s strong track record. Whether or not a building has been designed and built for sustainable maintenance and the quality of its upkeep are equally important, if not more.”
Yours truly (like the Edge's former chief editor ) also believes the "end game of any property investment is its capital appreciation". As a former committee member of 3 KLCC condominiums’ owners corporations, I also believe that as buildings age, a good property management team is key to keeping tenants. But in my opinion it's a myth buildings designed for sustainable maintenance that have a good Property Management team in place have preserved capital values and rentals.
You see there is the elephant in the room nobody wants to talk about: It doesn't matter how good their property management teams are, few 5* or 4* luxury condominiums have seen any actual real capital appreciation over the past 5-10 years.
Please just don't just take my word for it. Do your own empirical (IE evidence based) research. Punch out PropertyGuru Pricing Insights charts for the past 2, 5 or 10 years for property transactions prices and rentals in PSF for the 5* condominium of your choice.
In 2018, Quayside Seafront Resort Condominium at Tanjung Tokong, Penang won the inaugural Gold award for “Best Managed Luxury Residential Project” by EdgeProp. What do you think happened to property transactions prices and rentals in PSF at Quayside, a 1200 unit flagship luxury property project by E&O, after having an award winning property management team? Did property transactions prices and rentals in PSF at well managed Quayside stay the same, increase or decrease?
For answers, see PropertyGuru's Pricing Insights charts for Quayside 1 bedroom, 2 bedroom and 3 bedroom units below .
OK. What about well managed 5* luxury condominiums in KL? Let me show rhe property transactions price and rentals PSF for a 4 bedroom apartment at a benchmark for 5* KLCC luxury condominiums -The 66 unit Kirana Residence at Jalan Pinang. See below.
There was no bid at the recent 3rd auction for a freehold 4 bedroom 3842 SF apartment on the 9F of Kirana Residence. A 4th auction on 8 July 2022 at RM 569 PSF was withdrawn by the bank.
Perhaps you might think the reasons why no buyers turned up at the 1st, 2nd and 3rd auctions might be due to its:
outdated design ? (I disagree -the Art Deco inspired “ garden in the city” design by GDP Architects is outstanding) ,
poor location ? ( the #1 property search portal in Malaysia says Kirana Residence is the precise definition of a KL luxury condominium because everything you need is a hop, skip and throw away) or,
poor property management? ( in my opinion, the maintenance standards at this 22 year old property have been kept up and are comparable to its competitors- for pictures as at July 2022, see here).
See Disclaimer section below.
Rina Zaabar, a PEA, kindly drew my attention to a notable exception that high end KL property transactions prices in PSF have declined - the penthouses at Ritz Carlton Residences actually have increased in value in PSF. But she notes only the 12 out of 16 penthouses have outperformed smaller Ritz Carlton units. (These penthouses happen to be the units with nice views of the Twin Towers and the KLCC Park, according to the PEA who is also a team leader in charge of marketing high end branded Serviced Residences.)
Ritz Carlton Residences 1 and 4 bedroom property transaction prices in psf. Source PropertyGuru’s Pricing Insights charts
Post Script & Disclaimer
I am a owner of a Kirana Residence apartment since 2000. I was a former committee member of the Kirana Management Corporation (the owners corporation) in 2010-2012. I am the creator of a blog on Kirana Residence, www.360KiranaResidence.com
I am also the creator of a Penang based photography and food review blog, Seascapes and Coffee. The blog occasionally features stunning seaside photography of sunrise and sunset over the public beach park at Tanjung Tokong.
As a property blogger, I aim to track auctions of high end KL properties at my blog 360 KLCC (my blog’s Tag -Insights, Analysis and Perspective for the KL high end property market) .
Sample 360 KLCC posts :
“Is The KL High End Condo Market In Big Trouble?”
KL auction property market update #7 -The Pearl @RM582 PSF, Kirana Residence @ RM632 PSF to be auctioned in June
KL auction property market update #1
Selected posts on the KL property market:
"Is A Bird In The Bush Worth 6 In The Hand?”
Marketing KL high end properties
“Will Residential Property Prices Rise?” Part 1 Part 2
“Will rising interest rates roil the property market in 2022?”
Quayside Seafront Resort Condominium 1 bedroom, 2 bedroom and 3 bedroom units property transactions prices in PSF, source: PropertyGuru Pricing Insights charts
Quayside 2 bedroom and 3 bedroom units rents in PSF. Source: PropertyGuru's Pricing Insights charts
Kirana Residence 4 bedroom property transactions prices and rentals in PSF Source PropertyGuru's Pricing Insights charts
Kirana Residence, 7 Jalan Pinang 50450 Kuala Lumpur. Kirana's gentle curving facade viewed from KLCC Suria, just 5 minutes walk away
