Upswing boosts demand for quality services
How well properties are managed has become a central concern among expatriates, investors and international funds
THE ECONOMY IS doing well and giving a lift to the Hong Kong property business, and this has given rise to growing expectations about the way properties are being managed.
Quality property management is now a much sought after service. Three years ago it was a different story. Times were difficult and cost-saving was on everyone's mind. But there has been a shift in values and expectations, and property owners are ready to spend more for better care and maintenance of premises. They are beginning to insist on competent managers to take care of their assets.
The demand for good property management firms has increased sharply, according to Stephen Owens, associate director, property management, Knight Frank Petty, which manages about 90 properties. He said much of the demand came from individual owners of multi-owner residential properties.
Knight Frank Petty has received a flood of inquiries from such owners. Cost was the main reason owners had hesitated in the past to put their properties in the hands of professional managers, Mr Owens said.
Most of them now realised that they stood to gain by appointing professional managers. Economy of scale in matters of procurement and general daily operations helped to cut costs.
Another reason for better managed properties was the large presence of expatriates buying in the local residential market. There was a lot of buying by expats when prices dropped in 2003 and 2004.
'The expatriates who took advantage of the situation and bought flats at the time are expecting good management services. We have had plenty of inquiries from expat owners,' Mr Owens said.
Kendrew Leung, managing director of Savills Property Management, said the growing presence of local and international investors in the Hong Kong property market only emphasised the need for enhanced management.
'What Savills has seen in the last six months to a year is an increase in the number of whole block transactions by international funds and local investors,' he said.
'They often purchase older blocks in need of refurbishment to upgrade the facilities in order to reposition them as a better product in the market.'
Eric Lee, head of management solutions for Hong Kong and regional director at Jones Lang LaSalle, said the demand for enhanced management services in residential, commercial and industrial properties was natural in an economy that was recovering rapidly and where business was being stimulated at every level.
Meanwhile, the development of the real estate investment trust (reit) market in Hong Kong has brought a new dimension to property management.
'I am optimistic for this year, mainly because of the reits market development,' Mr Lee said.
'Reits is attracting a number of new market players to Hong Kong - some are fund managers, others are property investors. As a result, we as a company will have more opportunities to provide the kind of advanced professional services in the areas of property and asset management for which we are known.'
Jones Lang LaSalle, a leading international property consultant, manages 62 million square feet of commercial, industrial and residential properties in Hong Kong.
Competition is fierce - besides independent management firms such as Jones Lang LaSalle and Knight Frank Petty, many of the big developers have set up their own property management arms. There are also many small-scale managers specialising in single-block buildings.
During the economic downturn, the paucity of management contracts resulted in cutthroat competition and thin profit margins for property management businesses.
But the past two years have seen a revived market, and this has raised hopes for business growth and decent profits.
Still, industry players were cautious about raising prices.
Mr Owens said a market crowded with players, big and small, made for a tough business environment where it was difficult to raise prices. Rising staff costs and client resistance to paying extra meant working on tight budgets.
He said Knight Frank Petty would not be competing on pricing with the smaller players. The focus was more on luxury properties, where owners were usually prepared to pay extra for better quality services.
'Luxury residential property is an area where we have seen some growth in business,' he said.
Hong Kong's property management services were of a very high standard, as good as any anywhere in the world, Mr Owen said.
Jeremy Lamburn, leasing manager of Pacific Place Apartments, sees this world-beating approach as the basis of the standard for Swire Properties.
'Our team of resident services staff is multilingual and painstakingly trained to provide a luxurious but human experience,' Mr Lamburn said.
'As a result, residents and their spouses and children are greeted by their names. Special occasions such as anniversaries and family birthdays are remembered and celebrated with surprises.'
Rosa Ng, executive director of property management services with ISS EastPoint Facility Services, said property managers should be proactive about introducing initiatives and going beyond merely meeting customer expectations. She said her company would focus on quality service, rather than cutting rates.
'The market will continue to be competitive,' she said. 'But if we continue to deliver quality service and maintain good customer relations, which is very important, clients will stay with us.'
ISS EastPoint has a workforce of 9,000. It handles facility support services for more than 300 properties with a total gross floor area of more than 70 million sqft.
As part of its enhanced services, the company also offers clients property improvement recommendations, which help to increase the value of properties. Ms Ng said owners were showing a greater willingness to make that extra investment in the upkeep of their properties.
Meanwhile, Mr Leung of Savills Property Management said the firm was committed to providing a highly responsive, client-focused service.
The comprehensive services include building management, tenancy management, financial management and reporting, in addition to leasing and marketing.
'Essentially, what we are offering is a complete image re-engineering of a property's assets over its lifetime - from initial acquisition to eventual disposal,' Mr Leung said.