Role of property management in real estate growth.

In the past decade the skylines of Kenya’s cities and towns have been filled with magnificent skyscrapers.

They are statements of purpose, commercial success and faith in the future. Every day we see new ones and that counts for something in the form of income generation and employment for more than 70 per cent unemployed youth. What is not so visible is the upkeep of these structures over the short and long term. Property management is meant to capture both the value of the structure in terms of longevity of its technical life, as well as a reliable regular revenue stream.

Maintenance can be done in different stages. Reginald Lee defined those stages as follows:

  • Planning and design stage – which should be based on intended use and be as maintenance free as possible. In this stage a lot of money can be saved with the proper plan and design. For this reason, the building manager and maintenance personnel should be consulted during the early stages of the building design.
  • Construction stage – in order to have maintenance during the building’s life, construction must be done with the highest quality of workmanship. As a result, expert contractors and sub-contractors should be selected for the project.
  • Maintenance stage – which is performed after the building has been constructed and occupied. It is sometimes looked at casually, much to the detriment of the investment property itself.

During an economic downturn the tendency is to reduce the financing of maintenance, yet any reduction in resources applied to building maintenance will have a visible effect on the economy. There are buildings that although generating income have little of it ploughed back to meet the required standard in terms of conditions of use and the law. There is a mismatch between the development cost and what is spent to maintain the assets. Many building owners regard maintenance as a drain on their legitimate income and mistakenly claw back budgets set aside for upkeep. A rapid growth in the building and housing stock clearly appears in the Gross Domestic Product as a part of the country’s development. More houses are being constructed. As a result, more maintenance work is required in order to cope with this type of construction.

The objectives of building maintenance are therefore:

1. To ensure that buildings and their associated services are in a safe condition.

2. To ensure that the buildings are fit for use and purpose.

3. The condition of the building meets all statutory requirements.

4. To maintain the value of the physical assets of the building stock.

5. To carry out the work necessary to maintain the quality of the building.

Current building maintenance strategies are most likely to be budget driven. This means that maintenance is not based on actual need, but is dictated by financial priorities decided at the time or during the previous year. Although theoretically the budget should be built up as a result of estimated needs, it is almost invariably based on previous year’s figures.

Proper maintenance leads to lower depreciation costs (due to longer economic life) and consequently leads to higher profitability. At the national level, proper maintenance leads to lower expenditures on replacement, thus, allowing more expenditure on new productive investment properties.

Source : theSTAR

 

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