Don’t play play, ah!

There is a well-known quote by Warren Buffett about economic or financial crisis. “When the tide goes out do you discover who’s been swimming naked.” In recent years, I notice a rise in complaints against MCST council and Managing agents. To be fair, some are trivial issues voiced by overly-sensitive residents, while others can be as severe as mismanagement, extreme lack of financial prudence and even ‘hidden political agendas’.

Usually these are discussed openly in AGMs or in private with the MA. However in the current covid-19 crisis, many subsidiary proprietors (SPs) have found time to publicized their concerns on social media. I was told these pent-up frustrations have been accumulating for years in a number of condominiums around Singapore.

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Covid-19 demands Property Managing Agents to evolve

We are barely mid-way through the Covid outbreak. Nonetheless it is pressing to acknowledge the lasting impacts to social, business and daily lives. “At some point the COVID-19 crisis will end. But as was the case with the first and second world wars, the end of the crisis will not mark a return to normal. Rather, it will signal the advent of a new normal.”

http://www.japantimes.co.jp/opinion/2020/06/09/commentary/world-commentary/time-build-post-pandemic-world-order/

The crisis presents an excellent opportunity for Property Managing Agents (MA) to step up their modus operandi. Some have resisted change for too long. Others have pushed for upgrades with an exorbitant price tag. Neither is in the best interest of residents. As chairman, I am constantly looking for MAs who can improve their efficiency and provide value.

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Minutes not accurate? Sia Suay, secretary.

The AGM is a serious meeting for all owners in the condo development. The agenda is set in advance and should be strictly adhered to. An example of the sequence can be found in BCA’s strata handbook:

♦ The election of council members

♦ A motion for the adoption of the financial statement for the past financial period

♦ A motion to confirm the minutes of the last general meeting

♦ Other motions for consideration

Thereafter the meeting is documented and reviewed by other members of the committee to verify. There is very little room for error when conducted clearly and transparently.

How is it that an MC secretary (who happens to be a practicing lawyer) cannot clearly record the meeting minutes?

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Drama over for Pine Grove?

I am glad the six month impasse has finally ended. “The keys to the management office were given to the new managing agent on Monday, after an all-day affair which saw the police called in for assistance.”

https://www.straitstimes.com/singapore/row-over-running-of-pine-grove-condo-ends

From all that has been reported in the media, the 22nd Management Council (MC) clearly raises my eyebrow when they tried to postpone AGM at the final hour. This is totally unacceptable. From my years of being MC Chairman, the AGM date cannot be rescheduled unless two criterion are met.

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Cleaners, our silent Heroes

Everyday we struggle a little under the constraining measures of the circuit breaker. We cannot visit shopping malls; they are closed. No dining with friends. Young ones bemoan no bubble tea. And even younger ones cry for their playgrounds. Only when we are done with the complaining, we begin to realise the important stuff that matters has continued as normal.

All around me, Food and Cleanliness is uninterrupted. Supermarkets operate. Hawkers and restaurants continue to feed take-away patrons and supply delivery riders. The condo estate remains clean and litter-free. Even the pathways are swept clear of fallen leaves every morning.

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Freehold condo on sale at $922psf showing signs of property stress

While volume of transactions has declined over the past few months, prices have only dipped 1.2% in the first quarter of 2020. Somehow the numbers do not match the gravity of Covid-19. Why so?

The illiquidity of properties makes it slow to price in market factors. It normally requires six to nine months of lag period to gradually adjust towards where majority of buyers are willing to match sellers.

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Glut of unsold condos to remain entrenched in 2020

There is a lot of unsold condos in Singapore way before Covid-19. To be exact, 31,948 units as of 30 Sept 2019, according to the Urban Redevelopment Authority. “Sales have averaged about 2,500 homes per quarter… and at that rate it will take almost four years to clear the backlog, “according to Ms Christine Li, head of research for Singapore and South-east Asia at Cushman & Wakefield. (Source: Bloomberg & Straits Times)

Singapore GDP Growth Rate
Singapore GDP growth quarter-over-quarter
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Sinking funds tell ‘a tale of two cities’

A number of people who are on the hunt for their first condo home have asked many questions on online forums and via face-to-face conversations. Leasehold or Freehold? Facilities, residential profiles, monthly maintenance fee, etc. Within that monthly maintenance fee lies two components; the managing fund (MF) and the sinking fund (SF).

https://www1.bca.gov.sg/docs/default-source/docs-corp-regulatory/building-maintenance-and-strata-management/smg1-concept-of-strata-living.pdf

In other words, the SF takes care of the big items in the near future, while MF runs a monthly expense to keep the condo operational. Therefore it is crucial to find out what are the SF reserves an existing condo have. And whether it is financially stable to fund future works. If not, an extraordinary AGM may be called for all owners to cough up a lump sum. (see Case study: Killer lifts?)

One advice for first time condo buyers: ask the seller for the recent AGM booklet. Reading it will give you an excellent idea of how well the place is managed. And whether the existing sinking funds are sufficient to cover outstanding and future liabilities.

Take the case of Viz Holland and Citylights. Both are 99 year leasehold condos; built in 2008 and 2007. On first look the key difference is that Viz Holland has 165 units, while Citylights have 600 units.

(From past years AGM, actual SF contributions differ slightly due to increment in some years)

In the span of 12 years, Citylights would have collected $8,396 from a unit owner. Viz Holland would have collected $9,240 from a unit owner since its beginnings. Yet, a chunk of Citylights sinking fund has already been spent and only 37% of total collections remain. What does it mean? Bear in mind things like lift overhauls, pipes and pumps replacement, roof works can easily cost $100k- $1 million, especially over the 10 year mark.

Whereas for Viz Holland, 70% of the sinking fund remains to be deployed. The numbers do look much better and prudently managed. The question to ask then is whether Viz have done their 10 year replacement items? If not, when is it due? And what is the financial impact?

Again the details can be sourced from the Seller and verified with an on-site visit. If all things are equal, then clearly one is far better than the other. Go see for yourself. Caveat emptor.

Condo Managing App provides transparency real-time

A french start-up is using an app to help owners manage their residential buildings, akin to strata titled condos in Singapore. Seems like a great solution for Condo owners who prefer to stay out of sight but in-the-loop.

“Matera has built a web-based platform to view information, communicate with other co-owners and make sure everything is up-to-date. Everybody has their own account and can access the platform. Co-owners meet regularly to handle outstanding issues. Matera centralizes all topics, helps you write a report and checks that it complies with legal requirements.

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Virus affirms assertive Condo and troubles AirBnb

According to the South China Morning Post, the latest update on the Wuhan virus is close to 4500 people infected in China, with 106 deaths. “In addition to air transmission, the coronavirus can be spread through physical contact, China’s National Health Commission (NHC) said on Tuesday” (SCMP 28 Jan 2020)

No doubt our government is highly concerned and has swiftly implemented measures to keep Singapore safe. These include tracking at risk personnel and keeping them quarantined. I recall the overly restrictive (but on hindsight, forward-looking) rules of People’s Park Complex. Last August they decided to track and restrict visitors for vice. I believe the residents now benefit from an additional layer of administrative protection from the Wuhan virus.

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Case study: Killer lifts?

Once in a while we hear of killer litter offences. Yet there is another high-rise danger lurking; the killer lifts are often forgotten. (Some say killer pools.) These silent killers have a stranglehold on our finances through high maintenance and a large one-off sum for replacement at the end of their life spans.

We look at an example of an almost two decade old condo in District 21, with approximately 341 units. In the AGM previously, a list of facilities were drawn up to highlight their replacement costs due in the coming 3-5 years. They amounted to almost $11.5 million!

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How much for your green?

Nowadays we see a lot of hype in green landscaping among condos. Kudos to the Building and Construction Authority (BCA) whom promoted sustainable development with the green mark schemes and incentives. Our air is fresher and the economics made great sense for developers.

Yet some condo owners are not cheering. On closer examination, the green maintenance costs are surprising. I have heard much woes from friends in different MCSTs. Take a look at this excerpt from The Straits Times, which sums its up.

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Condo maintenance pitfalls

 “too little, too late”

Petróleos Mexicanos (Pemex) is the state-owned petroleum company of Mexico. In its prime, Pemex had assets worth $415 billion. It was also the world’s second-largest non-publicly listed company in 2005.

Today, Pemex is the world’s most indebted oil company with $176 billion of debts and liabilities. The Mexican government announced a $5 billion bailout for the company this year. However analysts say it needs to invest at least $10-$13 billion a year.

How did that happened over less than 15 years? Well, in short, years of disregard and non-maintenance. This is similar to managing a condo. Take for example the following chain of events:

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