Despite the impressive quality of many real estate projects in the UAE, there is “generally poor quality of the ongoing management of the completed properties,” said Alan Robertson, CEO, Jones Lang LaSalle, Middle East & North Africa.
It seems to be the case that, following massive investment in world class design and construction processes, there is then a failure to enhance or even maintain the value of the project through international quality, best in class property management, he noted.
Some owners even follow a “Do it Yourself” approach which, without the necessary resources or toolkit, is a bit like buying a top of the range Mercedes and then servicing it at home. It might save some money in the short term but in the long term it is invariably more expensive. Robertson emphasized that the quality of property management is often a key differentiator for owners and tenants alike, and needs to be more widely recognized as an area of great opportunity on one hand, and risk on the other.
For property owners, good management will contribute positively to the appearance, overall image and value of their asset.
“Well-managed properties will let faster in the first place, there will be strong levels of tenant retention, shorter void periods between tenancies, and better rental growth in the longer term. They will also have well organized, fair and transparent service charge arrangements which will give tenants confidence and make them more willing to pay their share, thus reducing the problem of arrears. A building with a pro-active planned and preventative maintenance program will be easier to maintain and will last longer,” he said.
Moreover, Robertson said well thought out and carefully planned service charge budgets will also lead to cost efficiencies, which will reduce the overall service charge levels and enhance the attractiveness of the building to new tenants.
“This should appeal to landlords as every dirham saved from the service charge can potentially be an extra dirham of rent. Well managed buildings will meet all legal, fire, health and safety regulations, thus reducing the chance of major incidents occurring (such as the recent tragedy in the Villaggio Mall in Doha, which should be a wakeup call to all owners in the region). The fact that all administrative and financial aspects of the building are in good shape will also mean that it is ready for sale at all times, thus giving the owner greater liquidity in their asset.”
For tenants, the quality of management is a key issue and one of the main factors which corporate occupiers use when choosing between office buildings, he noted.
A recent global survey of multinational occupiers by Jones Lang LaSalle and CoreNet found that the lack of equitable treatment and transparency in service charge arrangements was the most mentioned “pain center” for corporates considering new offices in emerging markets.
Fortunately, Robertson said, there are signs that a steadily increasing number of property owners in the UAE are recognizing the need for top quality property management and the benefits that it will bring. “Whatever the motive – be it to add value or to protect against potential disasters – this is a welcome trend. But there is a long way to go and, for the foreseeable future, the lack of foresight shown by many property owners in the region will continue to result in their assets being wasting ones,” he noted.
The Saudi Gazette
