Savills News

Property management: Challenges & Solutions

In the last six months of 2020, new business registrations for Property Management & Operational Services increased by almost 18% year on year. The market for these services has significant, and growing potential, however, old operational challenges stubbornly remain.

Property management is very familiar in more mature markets. The practice is essentially the property owner, or developer, sub-contracting out day-to-day management of all related operations, including systems and human resources management, operational and financial planning, maintenance, and risk management, security, cleaning, facilities management, etc. Property Management in more developed markets has evolved to become a tightly managed systematic approach to constantly elevating the value and reputation of the managed property to the developer, residents, and potential customers.

In essence, good property management is smart asset management; leaving the property in specialist hands to ensure its value is constantly protected and nurtured, which naturally extends to managing every aspect of the Real Estate asset. Developers may move onto to their next major project, knowing their previous development, its finances and its residents are in the best possible hands.

In Viet Nam, demand for property management services is driven by rapid growth across real estate segments such as shopping malls, offices, high-end apartments, landed property, and new urban areas.

The Housing & Real Estate Market Management Agency, under the Ministry of Construction, reported in H2/2020, the number of newly registered Property Management and Operational Services businesses had increased by nearly 18 percent. Notably, this developed in the six months after lockdown in Viet Nam had ended.

Ms. Vu Kieu Hanh, Savills Hanoi Property Management Director, commented: “The number of businesses registering to provide these services has sharply increased, of which, many have been established by experienced individuals in the industry. Due to business habits and the level of market development, these companies mainly provide more basic property management services, such as maintenance, cleaning, and security.”

The range of abilities required to effectively manage a property requires experienced staff with Ministry of Construction approved qualifications. A managed building also requires an elected board of directors. The management unit also manages, for the developer, internal and external relations, human resources, financial reporting, and audits. Premium Property Management is not limited to basic operations, but ideally to managing all public areas, resident issues, management problems, minimizing any conflicts, while ensuring completely transparent operations and finances.

Leading property management units also play a very important pre-launch role. They work closely with the developers, checking the quality of construction, rigorously testing technical systems and safety standards; ensuring user ‘journeys’ around the project are as frictionless and clear as possible, establishing and testing of management and operational procedures, developing project regulations, arranging security and cleaning services etc., to then supporting buyer hand-overs.

High-end projects require a highly experienced unit, fully informed of all relevant, local regulations, who not only understand, but can also effect seamless international standard management.

Ms. Kieu Hanh commented: “It is hard to say whether businesses that simply provide basic property management services can meet the rigorous standards professional management require. The issue with only providing basic services is gaps in customer service quality, which can often lead to easily avoidable, often festering issues”.

Ms. Kieu Hanh continued: “Currently, developers are tending to prefer professional management units that utilise modern technology. Wanting their project to run in the most efficient manner possible, makes their primary concern the reputation of the services provider.

Having a well-known international standard operational team not only makes the project more appealing, but by utilising from the outset precise systems, procedures and regulations, also establishes the strongest possible management foundation for the life cycle of a project.”

“Board of Director formalities involve having owner-residents actively voting for their management unit choices. The various criteria under their consideration include service costs and the reputation of the management unit in effecting services such as technical management and records, personnel planning, risk management, maintenance schedules, etc. The advantage of professional management boards is transparency in financial management for the Developer and unit owners, who are often residents.”

Savills Vietnam, established for over 26 years, has in excess of 2000 staff managing over 40,000 apartments in more than 110 projects. Savills is the clear market leader in international standard property management services, and the most innovative, especially with technology. Ms. Kieu Hanh, has a profound understanding of the business, but despite her expertise and experience is constantly looking to make seamless improvements: “From 2015 to now, operational management units have been constantly pressured on operating costs. However, at Savills, this problem has been significantly reduced by the introduction of our proprietary Property Cube app.”

In 2018, Property Cube was developed in-house exclusively for Savills managed projects. Its rapid uptake and success in Viet Nam has seen it deployed in Savills managed projects in key APAC markets, such as Singapore and Hong Kong. This smart use of modern mobile technology has greatly improved speed of reporting, financial transparency, and direct management communications with residents; with, for property management units, direct dialogue with the developer.

Under pandemic, Property Cube, by becoming the management board-resident communication channel, removed the need for any close contact. Its use has seen management efficiency significantly increased, and operating costs of managed buildings transparently optimized.

The trend of applying technology in property management is another solution to help service providers smooth operations. Smart use of technology is becoming a key differentiator of property management standards in Viet Nam, while establishing a clear competitive advantage for management services providers.

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