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Need for synergy


Property management (PM) or asset management is one of the most underrated tasks in the real estate sector. Over the last decade-and-a-half, however, PM has developed alongside Dubai’s skyline, and with it, has come a level of professionalism.


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Community Management
October 20, 2019
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Need for synergy

Property management (PM) or asset management is one of the most underrated tasks in the real estate sector. Over the last decade-and-a-half, however, PM has developed alongside Dubai’s skyline, and with it, has come a level of professionalism. Legislation has helped the cause as the Real Estate Regulatory Authority (RERA) has enforced timely laws and directives.

In this scenario, facilities management (FM) companies and owners’ associations (OA) have the shared goal of providing quality maintenance services to ensure that all systems in the building are functioning to their optimum levels and rigorous health and safety standards are being met. The FM companies facilitate the key objectives of the OA’s which are ensuring the building is safe and well maintained, and that asset values and investment returns are maintained or enhanced. Every FM provider should be providing the services that the OA want at a price they are willing to pay.

Yet, there are times when there is still a disconnect among the various stakeholders and especially between the roles played by the FM and OA. At CM today we believe that there is a strong need for both these entities to build a strong working relationship in order to cater better towards the industry at large. Taking a step towards this union, ‘Megha S Anthony’ spoke to representatives from FM and OAs to understand why there is a disconnect among them and what are the key challenges they face.

Why the disconnect?

Facilities Management is a core function of the OAs. Maintenance and operation of common areas which includes areas designated for communal use (gym, parking), common assets (elevators, fire protection system), and services (security, garbage collection) is the reason why OAs exists. “In principle OAs manage or should manage the facilities. However, OAMs cannot deliver the entire scope of FM, which is very broad multidisciplinary field. The scope of FM is divided amongst leasing agents, OAMs and FM service providers. There is an inherent overlap between OAM and FM. The OAM controls the budget and finance, renovations, contracts. Whereas the scope of FM service providers is mostly limited to day-to-day operations and PPM,” says Waqar Hassan, Itihad Community Management.

So why is there a disconnect? Lack of understanding of each other’s roles and lack of communication are some of the most common reason.

Many believe that there is a disconnect between the two entities as both believe they provide a better service. An OA controls, manages and administers the common areas on behalf of owners, and are responsible for all issues regarding maintenance, security, rule enforcement and engagement with statutory authorities. FM companies ensure functionality, comfort, safety, and efficiency of the built environment by integrating people, place, process, and technology. “The reality is that we are not competitors and working together would help us to achieve the very best results and complement each other’s work,” says Alharith Almoosa, Vice Chairman, Almoosa Owner Associations Management Services (AOAMS).

According to Garry Murray, CEO, PLACE Strata Management each party is trying to protect their own interests whether that is commercially, politically or operationally to the client and the outside world. “There is a trend in the UAE that companies gain licenses to conduct operations and the belief that if we work together and share information then it will be used to oust the other for the benefit of someone else. My opinion is different, I believe that if you do the job well then that shows greater integrity to our clients and will pay back 10x more than borrowing ideas from each other. We need to embrace each other's skills for the greater good which is a well ran, a wellfinanced and well-maintained asset that is sustainable for living, working, and operation for the years ahead. Think 5-10 years ahead for the asset, not just what is happening this year,” he adds.

However, many believe that this disconnect is slowly diminishing. “In our experience, there is not a significant disconnect between the two entities. However, there is always the chance that, when two groups must work together, their goals may not be aligned. This may come from a lack of understanding regarding what the role of the other group is. However, we believe any potential disconnect can be resolved through good communication and a desire to collaborate,” says Karthikeyan Ragothaman MRICS, General Manager, Emrill Services.

In the early days of the OA industry in Dubai, there was a gap in understanding between the FM providers and the OAs as to what each of their roles was. “A lot of lessons have been learned over the past 10 years and in addition, with the leadership of the Land Department and in particular RERA and DREI, there has been an advanced level of training and education made available to all stakeholders,” explains Alan Rowlands, GM of Three60 Communities.

Agrees Tamer Bishay, Business Development Manager, Concordia. He says that until recently FMs and OAMs were working in their separate silos and had a supplier/client relationship due to shortterm contracts. “Traditionally, relationships between facility service providers and OAMs have been based on the adversarial approach. Services have been purchased separately for single sites and price has been the determining factor in choosing a service provider.”

A contract that's re-bid every year doesn't suggest that a long-term relationship is being created. A longer contract with extended renewal options is more likely to foster a partnership, simply because of the longer duration. “By building contract renewal terms, you can extend the contract easily if things are going well and renegotiate pricing instead of rebidding the service. Progressive outsourcing agreements don't constrain the service provider with detailed specifications or procedures; they focus on the end result and let the service provider achieve the goals using their experience and abilities. Also, a flexible contractual arrangement (output v/s input) provides more opportunity for a partnership while also meeting overall goals and reducing costs,” adds Tamer. Tamer has noticed that both parties are becoming more open on sharing information that would benefit the properties and the owners. “OAMs are educating the Board Members on the importance of having the right FM provider on board and giving them a long term contract to allow them to invest in the property as well,” he adds.

Key Challenges

The Dubai FM sector has evolved and therefore OA companies continue to encounter several challenges. Right from communication, to the lack of teamwork, challenges are galore when it comes to working together. Firstly, the industry was initially managed by posted letters, committee meetings, and notice boards in the lobby; but clients and stakeholders are now more demanding. “As OA management, we are essentially an administrator and is it our responsibility to keep our clients compliant, informed and happy, and that’s what we did in AOAMS where we launched our new web-based portal and mobile app to enhance the digital customer experience,” explains Alharith.

Another prominent challenge that Alharith notes is that they are constantly confronted with is a large number of tenants living in the communities, to which they are often restricted because of lack of access to owners. “Developers want to maintain their ‘brand’ so they control and continue it across other projects. This includes having an input with regards to costs and maintenance providers to protect the interests of the builder. As a result, OAs are obliged to certify the FM companies to ensure compliance and transparency are in place,” he adds.

According to Waqar, owners and tenants are not clear on the scope of services, they have expectations that OAM should deliver a more comprehensive scope get more involved in dayto- day site issues. This challenge is to overcome by a proactive FM team that does a good job without jeopardising the OAM's reputation.

Another main challenge faced by OAs is ensuring they have the required funds available in order to function seamlessly. It is imperative they have a robust capital reserve fund and insurance policies to protect their assets, says Alan. “There is a high percentage of leased properties in the UAE market and it is the challenge of the OA manager to ensure that they are able to reach those residents as well as the unit owners, with whom they have a contractual obligation. One of the roles of the community manager is to enhance the community lifestyle for all residents and so must be able to engage with all residents,” he adds.

Karthik notes that very often, OA and community management representatives are customerfacing and have frequent interactions with homeowners and residents. “As part of their role, OAs and community management providers must also ensure compliance with local statutory and legal compliance which can, on occasion, seem onerous on the FM service provider. However, what can prove to be a very challenging situation can be remedied by the benefits of the FM service provider and owners’ association building a strong relationship and keeping lines of communication open,” he adds.

A big challenge Garry notes is with procurement, of spare parts and ad-hoc work. “The OA manager is being left to procure these jobs whilst the FM watches, this is common practice. The FM market has access to suppliers that we don’t, scales that we don’t, and better credit terms for regular suppliers. This needs to be discussed at tendering stage and FM suppliers need to pitch how they can help the OA in this regard. It’s a selling point to be awarded contracts,” adds Garry.

Educating the board is key, says Tamer. Board members are investors that decided to invest in the UAE property market, they won’t necessarily have a lot of knowledge on running a property. Tamer observes, that being a very unique real estate market, many owners of real estate are nonresident investors. This creates a unique situation where the collection of service charges and dues becomes challenging which in turn creates paucity of funds to run and maintain the building. This puts additional pressure on OAMs and FMs to not only manage the building’s cash flow while providing same levels of service but also collecting their own dues.

“Aside from that, commercials continue to create pressure. With the current property situation, all stakeholders are looking at reducing the operating costs of their assets. This includes the fees of the OAM, the FM, utility bills, etc. With the latter, OAMs have a major role in getting OAs to hire experienced efficient service providers that can save them costs and improve their assets on the long run instead of hiring the cheapest that ultimately can damage their assets,” adds Tamer.

Benefits of working together

The fact of the matter remains that facility managers and OA managers cannot operate without each other as their roles are co-dependent. The symbiotic relationship between FMs and OAs is essential for the long term benefit of the property, its assets and all stakeholders involved. While the OAs focus on managing regulatory requirements & frameworks, financial management, risks, and general administration related activities for the assets under their management, the right FMs are essential in making it all work.

FMs are the front line staff that delivers services as stipulated by the OAs. They deal with, plan and react to the needs of the occupiers and end-users. These services are crucial to managing the entire lifecycle of all the assets and installations within a building, provide financial planning information and assist in enhancing the life of assets thereby improving the property’s capital value and return on investment.

“Both these entities, working in close collaboration, can ensure that stakeholders needs and their investments are safeguarded, end-user satisfaction is high which will help maintain high occupancy levels thereby providing owners a better ROI and managing and meeting all regulatory and statutory compliance requirements. Long term collaborations will also lead to lowering of costs through better efficiencies, higher investments in people, equipment and technology which in turn is a win-win situation for all concerned,” states Tamer.

Garry too adds that in order to remain competitive in the market, our greatest ability to maintain and grow our client base is service delivery. It needs to be at the core of everything we do for our clients, he notes. “We are stronger together. In an operational environment with many moving parts we need to be a team and use the data and information that both have to provide a clear picture to the client,” sums up Garry.