Property Management Considerations for Investors

June 28, 2017, 9:43 a.m.


Property management deals with cleaning, security, insurance, and accounting. It’s important in Cambodia because there’s a lack of regulation in the country in terms of those specific elements of property development. This lack of regulation presents uncertainty, and uncertainty means risk – an important consideration for investors. This is what Simon Griffiths, General Manager for asset management company Metro Global, told the attendees of the Cambodia Real Estate Show.


In his presentation, Griffiths uses this as basis to talk about regulatory framework and the practical considerations for property management in the Cambodian market.


Metro Global, a company based out of Singapore, originating from Australia. Our first two projects would be The Bridge and The Peak.


Dangers in the Legal Framework


Griffiths zeroes in on the topic of the 2009 Sub-decree on the Management and Use of Co-owned Buildings.


He explains that the sub-decree excerpt states that “in order to manage the co-owned building, the co-owners shall establish a management board or an executive committee as agreed among themselves following the prescribed internal regulations.”


It also states that “for the co-owned building composed of at least 5 (five) co-owners, there should be a co-owned-building management organization through the establishment of a Management Board or an executive commission in charge of the co-owned building.”


But he explains that the sub-decree doesn’t go into much detail of things like how to form the said management board for the co-owned building nor are the respective roles for this management board discussed.


Griffiths says, “In terms of the regulatory framework for property management, there’s a sub-decree in 2009. This sub-decree, it’s good, but it doesn’t cover much. I’m happy it’s there but it covers more of the use of the co-owned space and that actually, co-owners have to pay a service charge. But it says very, very little. “


He warns, “There’s huge holes which, in the wrong circumstances, could severely affect a co-owned building.”


Practical Considerations for Investors


Despite these limitations in the legal framework for property management, Griffiths says that you can also limit the risks by looking into the developer’s reputation, the property management agent’s reputation, the property management budget, building regulations, internal regulations, service charge the property management registration and structure, and the sinking fund.


Checking out these factors first will help you to stay away from the potential harm brought by the shortcoming of the country’s legal framework.


With a developer, for example, asking for their financial and development plans will show you how far off they are into the process and what their current state of mind is. Griffiths explains that developers who wish to do more business in the country will definitely take care of their reputation. And part of taking care of this reputation is by including property management in their plans.


Griffiths concluded by saying, “I would say that there are a lot of ethical and moral companies out there. There are a lot of people who want to do things in the right way. But it’s always good to know the worst case scenario and be cautious and have knowledge about it.”


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