| Bangkok condo management costs rising | | | | not compromise on safety issues and need |
| Many condominium buildings in Bangkok | | | | to ensure the safety of all the |
| had their common area management fees | | | | occupants of the building", said Ms. |
| set over ten years ago when the | | | | Chanpen. |
| buildings were first completed. Not only | | | | In contrast, hotels undergo a major |
| has the cost of providing standard | | | | refurbishment of their public areas at |
| services risen dramatically but, as | | | | least every seven years. |
| buildings age, the cost of repairs and | | | | There are many condominiums in Bangkok |
| the need for improvements have also | | | | which are now more than ten years old |
| risen significantly. | | | | and have not had significant |
| Ms. Chanpen Thavorncharoenpon, Director | | | | improvements to the common areas. |
| of Asset Services as the CB Richard | | | | This is an issue which is increasingly |
| Eills, looks at the challenges facing | | | | affecting property values. The value of |
| condominium management committees and | | | | a condominium is determined by its |
| condominium co-owners. | | | | location, design and specification. Many |
| Most condominium buildings have two | | | | older condominiums are 50% of the cost |
| sources of funds: firstly, common area | | | | of new condominiums in a similar area. |
| management fees paid by co-owners | | | | Somkid Gardens, which was completed in |
| normally on a monthly or quarterly | | | | 1991, is one of the few older |
| basis; and secondly replacement sinking | | | | developments where resale prices have |
| fund | | | | kept pace with new developments in the |
| The sinking fund should be made up of | | | | area. CB Richard Eills believes this is |
| the contributions made by co-owners when | | | | due to the condominium management |
| owner ship title was transferred by the | | | | committee spending considerable money on |
| developer. The fund should be deposited | | | | upgrades to the common area and |
| in an interest bearing account and | | | | co-owners renovating their own units. |
| technically should be used for | | | | Ms. Chanpen added: "We believe that, |
| replacement of capital equipment in the | | | | even to maintain minimum necessary |
| building. Common area management fees | | | | standards, condominium owners will have |
| were, in many buildings, set when the | | | | to pay higher common area management |
| building was completed and, since that | | | | fees. If co-owners want to maintain the |
| date, costs have risen considerably. | | | | value and attractiveness of their |
| CB Richard Eills estimates that | | | | property they will have spend additional |
| electricity costs for a condominium, | | | | sums on improvements to the common |
| which are one of the largest single | | | | areas." |
| expenses, have risen significantly. | | | | "Condominium management committees have |
| It is not only the daily operating costs | | | | two choices of raising funds; they can |
| that have risen but, as buildings age, | | | | either raise the common area management |
| the cost of repairs increases as it also | | | | fee or ask co-owners to make a capital |
| becomes necessary to undertake | | | | contribution to finance the repairs and |
| improvements; for example, the | | | | improvements." |
| renovation of the main lobby and common | | | | The Condominium Act requires agree to an |
| areas. | | | | increase in common area fees. This is |
| Some repairs are critical and can not be | | | | difficult in many cases where less than |
| delayed. Lift ropes, for example, have a | | | | 75% of the co-owners attend the annual |
| life span of 10-15 years, after which | | | | general meeting. There is a proposal to |
| they need to be replaced. Smoke | | | | amend this to a simple majority vote of |
| detectors and lift safety devices also | | | | all co-owners but it remains unclear |
| start to fail about ten years after | | | | when this amendment will become law. |
| installation. CB Richard Eills has | | | | Despite the difficulty in getting a 75% |
| recently completed the full replacement | | | | vote, co-owners need to take action |
| of the smoke detection and fire alarm | | | | because, in many cases, expenses will |
| systems at several condominium buildings | | | | now exceed income, resulting in funds |
| that now are more than ten years old. | | | | from the sinking fund being drawn down |
| "We believe that condominium owners can | | | | to pay for ordinary operating expenses. |