This article first appeared in City & Country, The Edge Malaysia Weekly on July 8, 2024 - July 14, 2024

As stratified buildings become more diverse and multifunctional, the Strata Management Act (SMA) may not fully align with current trends. This has prompted calls within the property management industry for a shift towards self-regulation to emphasise ethical practices and professionalism, ensuring that industry standards adapt effectively to meet contemporary challenges.

In his welcome speech for the “Building Management Series 2 — Sustainability and Practical Challenges” seminar on June 25 at Petaling Jaya, Building Management Associations of Malaysia (BMAM) president Tan Sri Eddy Chen said: “Eventually, we may need to look at self-regulation ... The law is more of a performance-based framework, ensuring it fulfils its intended purposes effectively. While self-regulation means we [property managers] need to have more ethical practices and professionalism when we carry out our duty.”

Attended by shopping mall and property management industry players, the one-day seminar was jointly organised by the Malaysia Shopping Malls Association (PPK Malaysia) and BMAM to discuss various industry topics such as sustainability in building management, aspiration for good building management, review of SMA, multiple property management rates, and common area usage in a stratified building.

“This seminar is another collaboration between BMAM and PPK Malaysia. For the past 10 years, we have been jointly organising various events that are common to us such as building management. We hope that we will continue to work together with guest speakers to share information and knowledge on the latest and best practices in the industry,” Chen said.

Some of the speakers and panellists were Sunway Malls senior general manager KS Wong; 1 Utama Shopping Centre director Teo Chui Ping; PPK Malaysia advisor Richard Chan; KN Lee Associates principal Lee Kim Noor; BMAM vice-president Patrick Ho; The Edge Malaysia editor emeritus Au Foong Yee; AJ Ariffin, Yeo & Harpal advocate and solicitor Datin Harwinder Kaur; and BMAM secretary-general Lee Weng Onn.

In her presentation session titled “What are the amendments needed for the SMA?” KN Lee Associates’ Kim Noor echoed BMAM’s Chen’s view that although the strata management industry landscape has progressed drastically in the past decade, the SMA has yet to catch up with the industry changes and the latest trends, such as the increase of short-term rental in stratified developments.

“Airbnb is mushrooming everywhere but there is no provision in the SMA. Apart from the wishes of the majority owners (whether to accept short-term rental in their building), it is necessary to take into consideration the security, health [during pandemic], fire safety and minority rights … [However], there are a lot of questions to answer, but they cannot be found in the law,” Lee said.

Therefore, she opined that SMA should be used as a statute but not a manual. “When [it comes] to property management, we should use common sense and a simple practical manual with [examples] to provide proper guidance on how to manage a property in a flexible and effective way.”

Speaking on effective property management, PPK Malaysia’s Chan, who hosted two sessions titled “Winning awards — an aspiration for good building management” and “Practical aspects on common area usage”, shared that one way to improve management quality is through submitting the property for relevant awards’ judgment.

“Submitting your property for professional judgement not only helps you to understand your current standing but it also provides an opportunity to learn from judges’ comments and feedback, enhancing your property management skills and building, at no cost,” he said. “Do not think you are too small for award’s submission. We have seen small shopping malls from smaller towns excel and surpass larger city malls. Ultimately, it’s not just about winning awards. It’s about recognising how far you have progressed and improved over the years.”

As the chief judge of The Edge Malaysia Best Managed & Sustainable Property Awards (BMSPA), Au agreed with Chan that the benefit of submitting property for award is intangible.

“BMSPA is poised to fill up the missing link in the real estate ecosystem [to set a benchmark for well-managed property]. As there are more strata developments in the city, imagine if they are not well managed, the city will turn into a slum. Without good property management, we won’t have a good property landscape, what more sustainability,” said Au during the panel forum.

She added that submitting a building for professional award judgment is not only an affordable branding strategy but also a means to elevate the image of the building’s owner and manager as a committed operator who is dedicated to continuous improvement of the building’s value in a sustainable way. 1 Utama Shopping Centre in Bandar Utama, Petaling Jaya, is one good example.

As the Gold winner of BMSPA 2019 in the 10 Years and Above — Retail category, it has never stopped evolving itself to become a better and greener version, according to I Utama Shopping Centre’s Teo.

In the “Sustainability in building management — Case study of a green mall, 1 Utama” presentation session, she highlighted that the mall was designed with green features and sustainability in mind from day one as the company had the plan to fully own and operate all the commercial components of the 1,000-acre Bandar Utama township development, including the mall, for the long term. Hence, it is necessary to reduce the operation cost.

“From the business perspective, it makes business and economic sense because green features will help reduce the overall operating cost. It is why we already got a green mall status as early as in our phase 1 in 1995 and will continue adding the latest green features in phases 2 and 3. For example, the BAS (Building Automation System), ice and chilled water system, rainwater harvesting system, solar PV rooftop installation and others,” she said.

The mall has a tropical forest inside a mall with more than 100 species of trees. The Secret Garden on the rooftop also helps to cool down the building temperature. The shopping mall also features a recycling centre that collects plastic, cardboard, old clothing and e-waste from tenants and shoppers.

Also presenting on a similar topic was Sunway Malls’ Wong. His presentation, titled “Sustainability stewardship — A commercial building management perspective” focused on the importance of sustainability in the retail landscape.

“Retail sector is one of the top 10 most carbon-intensive industries, responsible for roughly 25% of global greenhouse gas emissions, of which 98% [are from] the extensive retail value chain … The retail industry has transitioned from being a niche concern to a mainstream business imperative, driven by several key factors, namely the environmental concerns, social responsibility and regulatory environment,” Wong said.

To kick-start the sustainable journey, he suggested that retailers hold sustainability audits to assess the impact and then set a sustainable goal before engaging the stakeholders to share understanding and commitment. “Mapping out your plan before implementing it to achieve the sustainability goal is key. You may refine the plan along the way while [keeping a lookout] for new opportunities for innovation and collaboration.”

In her session titled “Current issues on multiple rates and their implications”, AJ Arifin, Yeo & Harpal’s Harwinder explained that there is a lot of uncertainty [about whether] a Joint Management Body (JMB) or Management Corporation (MC) can charge multiple rates for a development and under what circumstances they can be charged.

“Under SMA, if a development is a mixed-use development comprising different components, the MC must first identify and distinguish the various facilities used by each component before obtaining a professional calculation on the charges payable by the proprietors of each component. The key word here is significantly different facilities. Once identified, they must present the calculations in an annual operations budget and pass a special resolution as identified in Section 2 of the SMA,” she said.

She added that the MC may, by special resolution, make an amendment to the by-laws or add new by-laws, provided they are not inconsistent with the by-laws that are made by the ministry, for regulating the control, management, administration and maintenance of the building.

“You must pass a special resolution in a general meeting, which will bind the MC and the proprietor. So, if an additional by-law is passed, the MC can grant exclusive use and enjoyment of that designated part of the common property to a particular group of proprietors, but that designated part will still be controlled and managed by the MC. This is where they can charge the rates for the exclusive use of that particular part of the common property.”

Citing one legal case, “Sime Darby Brunsfield Damansara vs Oasis Park JMB”, which involved an integrated mixed development comprising office, retail, service suites, residential and commercial components and was dissolved last year, Harwinder said during the developer’s management period, there was restricted use of common property to other components of the development. However, the High Court held that such rates of charges are not equal in amount because there are significantly different facilities but should be proportionate to the common property and facilities utilised by the particular proprietors.

“The High Court held that parcel owners or different components should be entitled to pay multiple rates based on the actual or expected expenditure necessary for maintaining the common property for their benefit,” she explained during her second presentation session titled “Implications on common areas arising from the recent legal case for strata buildings”.

In the second panel forum moderated by BMAM’s Weng Onn, Harwinder answered a query on whether, every time a component is completed, the Certificate of Completion and Compliance (CCC) can be issued and the sub-MC for the component will be allowed to carry out their duties.

She explained that the current strata regulations do not cater for that but amendments should be made whereby when the developer plans for the base development of a project, it also plans for sub-MC. This applies to mixed-use developments that have their own components, so each component will be run by its own sub-MC upon receiving CCC.

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