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Rising property management costs in Bangkok

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



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