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Why are developers not consulting Property Managers during design and construction?

As Property Managers, whenever we enter a building it’s automatic that we begin to analyze, compare, sometimes criticize, or perhaps take notes of something new.  It’s in our nature and in many ways, it helps us to improve.  We spend so much time in different buildings, so together with the trained eye to spot things, it is inevitable that these observations are made.

I’m certain that anyone managing property has been in a situation where they find themselves asking the question ‘why have they (the developer) done that’?  This, of course, refers to physical elements of the building such as the positioning of security desks in the lobby or even the size of the lobby in some cases.  These are instinctive thoughts from those of us working in the industry.  However, once we dig deeper into understanding how a building is managed coupled with the complexities of budgeting and service charge calculations, you very quickly ask yourself another question – why are developers not consulting Property Managers during design and construction?

The first thing to point out is that developers face many difficult challenges, including a volatile market, ever-changing regulations, and fluctuations in build costs.  These are all extremely testing for developers competing fiercely to establish or maintain their reputation in the market.  This reputation is defined by the people who use the finished product, be it residents in their homes or companies occupying office space, at a time when the property manager is responsible.  So, if the reputation of the development and developer is made or broken once it is in the hands of the management company, why would they only be given a month (typically) to advise the developer and prepare to welcome residents.

Property Managers have a wealth of knowledge that can preempt ‘Post-Occupation Evaluation’ pitfalls – from the physical elements of the buildings, the complicated logistics of handover and snagging. Also, common contractual issues which arise long after occupiers settle in a building. 

By engaging with a property manager early on, developers will benefit from the input of the professionals that will be the ones taking care of the property.  The areas in which the management company can advise include design, feasibility, governance and financial. 

Design

It may not seem like an obvious task for a property management firm, and the suggestion is not that property management companies take over the design from architects.  Far from it, we are fortunate to live in a city where architectural boundaries are pushed to the limit and we are blessed with some truly iconic designs.  There are occasions in some of the more standard buildings where some minor changes make a lot of difference to the building, these include:

  • Large lobby areas –  These can look fantastic in Burj Khalifa but in a typical residential building, the question of cost is a major issue.  The room needs to be kept cool and furnished correctly, both costly to the end-user.
  • Façade design – Complex designs look great but are often very difficult to clean, which means a much higher cost for cleaning.
  • Void areas – These are areas or rooms in a building which, for all intents and purposes do not have a use.  With very simple changes, these can be transformed into usable spaces such as kids’ play areas or a games room.
  • CCTV monitors – Often placed in a separate room, which requires additional security personnel.  By placing them at the security desk in the lobby, you remove the need to employ additional security.
  • Form over function – What might look attractive in a rendering can sometimes be impractical, for example, bowl style washbasins look great when mocked up but are very difficult to keep clean and free from grime.
  • Building Management System (BMS) – BMS are now common in buildings but are often not utilized properly.  The purpose of a BMS is to help those managing the building once complete, so surely those managing should be consulted with.  These systems can be a huge cost but it is very typical to find that only a fraction of its capability is being used, and at the same time, some basic functions like access control on doors are not included.

Financial

Finances dictate many factors of how well a property is managed, in the worst case we have seen buildings being cut off by DEWA.  Developers try to mitigate this by incorporating a service charge rate in the Sales & Purchase Agreement (SPA), but this is often done simply by looking at neighboring buildings and adopting a similar rate.

Each building is different, each developer has a varying vision so the preparation of a budget should be high on the priority list.  One of the frustrations of owners taking handover is that the service charge rate shown in the SPA is very different from what they are being asked to pay. By working with the management company early on, the developer can instill their vision allowing the management firm to understand the finer points of their requirements and prepare a detailed, properly researched budget. 

Feasibility

A great deal of time and money is spent on the feasibility of a project.  Projected costs, income, and margins are just a few of the items analyzed to understand the project’s viability.  A property manager can play a role here too.  Experienced property managers have a wealth of experience and expertise, which developers can tap into to understand some finer points.  Insight into understanding preferences of residential tenants, or perhaps knowledge of whether commercial tenants in a certain area are looking for small, fitted offices as an example.

Governance and Compliance

Dubai, like any other major city in the world, has a complex framework of governance and compliance.  They are in place to safeguard the interests of all, but it does mean a lot of work for developers.  When it comes to the management of property, two documents that play an integral role are the SPA and the other is the Building Management Regulation (formerly the JOPD).  I referred to the SPA earlier and in particular those which include a service charge rate. 

The Building Management Regulation (BMR), in its most simple explanation, is the rule book for the property.  It is such an important document but in so many cases it is left as an afterthought by developers, which more often than not is simply copied from another building with a few minor changes (if any) made.  By allowing the property manager time with the BMR, they, along with the lawyer and developer can insert important measures that would likely safeguard or enhance the developer’s reputation. 

Things as simple as not allowing pets to implementing leasing measures that restrict sharing accommodation can be part of the BMR.  You may find the developer wants to maintain a certain level of service, after all, it is their vision, an example of this could be to include valet service or concierge services.

To conclude, there may not be a quantifiable way to measure the importance of working with a property manager early on.  It is clear, however, that the developer would place reputation as one of their most important selling tools.  This is enhanced by providing well-planned developments, with properly budgeted service charges, meaning that investors are more likely to return to the same developer for future developments.

Let us remember, it is the developers, whose ambition and vision are creating these buildings.  Architects, consultants, engineers, and contractors are employed to help the developer create their vision.  So, the question again is, why are developers not consulting property managers during design and construction?