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