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Rising property management costs in Bangkok

Bangkok condo management costs risingnot compromise on safety issues and need
Many condominium buildings in Bangkokto ensure the safety of all the
had their common area management feesoccupants of the building", said Ms.
set over ten years ago when theChanpen.
buildings were first completed. Not onlyIn contrast, hotels undergo a major
has the cost of providing standardrefurbishment of their public areas at
services risen dramatically but, asleast every seven years.
buildings age, the cost of repairs andThere are many condominiums in Bangkok
the need for improvements have alsowhich are now more than ten years old
risen significantly.and have not had significant
Ms. Chanpen Thavorncharoenpon, Directorimprovements to the common areas.
of Asset Services as the CB RichardThis is an issue which is increasingly
Eills, looks at the challenges facingaffecting property values. The value of
condominium management committees anda condominium is determined by its
condominium co-owners.location, design and specification. Many
Most condominium buildings have twoolder condominiums are 50% of the cost
sources of funds: firstly, common areaof new condominiums in a similar area.
management fees paid by co-ownersSomkid Gardens, which was completed in
normally on a monthly or quarterly1991, is one of the few older
basis; and secondly replacement sinkingdevelopments where resale prices have
fundkept pace with new developments in the
The sinking fund should be made up ofarea. CB Richard Eills believes this is
the contributions made by co-owners whendue to the condominium management
owner ship title was transferred by thecommittee spending considerable money on
developer. The fund should be depositedupgrades to the common area and
in an interest bearing account andco-owners renovating their own units.
technically should be used forMs. Chanpen added: "We believe that,
replacement of capital equipment in theeven to maintain minimum necessary
building. Common area management feesstandards, condominium owners will have
were, in many buildings, set when theto pay higher common area management
building was completed and, since thatfees. If co-owners want to maintain the
date, costs have risen considerably.value and attractiveness of their
CB Richard Eills estimates thatproperty they will have spend additional
electricity costs for a condominium,sums on improvements to the common
which are one of the largest singleareas."
expenses, have risen significantly."Condominium management committees have
It is not only the daily operating coststwo 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 alsofee or ask co-owners to make a capital
becomes necessary to undertakecontribution to finance the repairs and
improvements; for example, theimprovements."
renovation of the main lobby and commonThe Condominium Act requires agree to an
areas.increase in common area fees. This is
Some repairs are critical and can not bedifficult in many cases where less than
delayed. Lift ropes, for example, have a75% of the co-owners attend the annual
life span of 10-15 years, after whichgeneral meeting. There is a proposal to
they need to be replaced. Smokeamend this to a simple majority vote of
detectors and lift safety devices alsoall co-owners but it remains unclear
start to fail about ten years afterwhen this amendment will become law.
installation. CB Richard Eills hasDespite the difficulty in getting a 75%
recently completed the full replacementvote, co-owners need to take action
of the smoke detection and fire alarmbecause, in many cases, expenses will
systems at several condominium buildingsnow 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 canto pay for ordinary operating expenses.



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