Property Managers Suffer The Consequences of Overhang Properties By Lowering Service Charges

Pavither 30 Nov 2017

The Malaysian Institute of Professional Property Managers (MIPPM) has revealed that the large number of unsold completed strata properties, such as condominiums, is also negatively affecting its members.

This is because property managers are struggling to collect service charges. Typically, it is real estate developers who pay the fee for unbought units. But because their revenue is getting hit by the high number of unsold inventory, they are finding it hard to fork out money.

“Currently, there are situations where 30 percent to 40 percent of condos we manage are unsold,” said MIPPM President Sarkunan Subramaniam on Wednesday (29 November).

In addition, property developers sometimes slash the service charges for their units in order to entice buyers. As a result, there is less funding for building upkeep and maintenance.

“The worst part is for them to sell a property, some of them price the service charge lower in order to attract buyers,” he explained.

Meanwhile, Sarkunan noted that rents of new office buildings are being dragged down by the supply glut. Consequently, occupants in old and un-refurbished properties are motivated to relocate to newer premises due to lower rent.

“Grade A or MSC-status buildings have positive absorption. From there you can infer that the glut is actually occurring in Grade B buildings which are old and haven’t been refurbished, that is where the glut is.”

“When it comes to new buildings, yes, there is an oversupply but they are the ones who are absorbing all the tenants who are coming from secondary buildings, because rents are coming down,” added Sarkunan, who is also a Managing Director of Knight Frank Malaysia.

This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email

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