This article first appeared in City & Country, The Edge Malaysia Weekly on July 29, 2024 - August 4, 2024

Menara UOA Bangsar, developed by UOA Group, was one of the first developments in the country to have subsidiary management corporations (sub MCs).

Located in Jalan Bangsar Utama, Kuala Lumpur, it is a mixed-use development comprising two office buildings (39-storey Tower A and 24-storey Tower B) on a three-level retail podium, six-level elevated car park and four-level basement parking.

Henry Butcher Malaysia (Mont Kiara) Sdn Bhd (HBMK) was appointed the property manager of Menara UOA Bangsar by its management corporation (MC) in December 2017.

Upon taking over, the HBMK team found that it was inefficient to manage the development with a single MC as there were several components that required attention. Therefore, after several meetings, it decided to form two sub MCs to streamline operations.

According to a previous article in The Edge Malaysia, a sub MC’s responsibilities are similar to those of a joint management body or MC, but is only set up when there is a need for a separate management body due to the stratified development having multiple components and is too large to be managed by a single MC.

A sub MC runs independently in terms of collecting maintenance fees, managing the sinking fund account, enforcing by-laws and maintaining the upkeep of limited common property (LCP). Unlike common property in a single-use stratified project, the LCP is common property that has been designated for the exclusive use of one or more components in a mixed-use stratified development.

Menara UOA Bangsar MC secretary Khaw Chay Tee explains the events that led to the formation of sub MCs. “I think the problem wasn’t governance or anything like that. This place was well governed, very strictly run, very open and very transparent. But misunderstandings or differences and disputes arose over what was common property and private property, as well as who should pay for common property and who should pay for private property, so people got very confused.

“There was one owner who felt so strongly about this that he went to court. He took us all the way to the Federal Court and he lost, which was a waste of money because we spent almost half a million ringgit defending this case. I think the most important thing that came out of this is that all issues should be negotiated. People should not simply resort to going to court but should negotiate. What was very good about the developer in this case was that, when we met with them, everything was negotiated. And what we could not agree on, we would allow a third party to settle the matter.”

For its exemplary efforts, Menara UOA Bangsar has been named the Gold winner in the 10 Years and Above Mixed Development (Entire) category and has also received the Editor’s Choice award for Sterling Stakeholders Partnership at The Edge Malaysia Best Managed & Sustainable Property Awards 2024.

When it was decided that having two sub MCs would help solve the problems in the maintenance of the development, a general meeting was held in September 2020 to approve the appointment of a land surveyor and a mechanical and electrical (M&E) consultant as well as discuss the cost of engaging a property management consultant. However, due to the Covid-19 pandemic, things were put on hold for more than a year before a town hall meeting was held in June 2022.

In July 2022, another general meeting was held. According to Khaw, the meeting included a presentation by the appointed surveyor on the demarcation plan and its respective proprietors, the distribution of the maintenance fund and sinking fund accounts, as well as the proposed rate of charges and sinking fund of the sub MCs. Once these were approved, the land surveyor finalised the demarcation plan.

In October 2022, another general meeting was held to lay out the finalised demarcation plan and the constituents of sub MCs, present the voting process and form a special task force to count the votes led by at least one Sub MC member.

The poll results for the comprehensive resolution were out on Dec 13, 2022, leading the resolution to be filed with the Commissioner of Buildings Kuala Lumpur on Dec 19, 2022. The Certificate of Comprehensive Resolution was issued to Menara UOA Bangsar in early April last year.

Following that, the MC submitted the application for sub MCs to the Pejabat Pengarah Tanah dan Galian Wilayah Persekutuan in mid-April last year. On Aug 2, 2023, the application to establish Menara UOA Bangsar Tower A Subsidiary MC (Tower A sub MC) and Menara UOA Bangsar Tower B Subsidiary MC (Tower B sub MC) was approved.

So now, the MC manages the general common facilities, while Tower A sub MC manages its 426 parcels of office lots and Tower B sub MC manages the whole of Tower B, the retail lots and the car park.

Khaw explains the main benefit of having sub MCs. “Sub MCs come in very handy when [it comes] to defining which areas are LCP and therefore belong to this particular MC … Those areas that are delineated as limited common property, say for Tower A or Tower B, are very clearly defined now. This will minimise disputes between parties,” he says.

“In the case of Tower B, they have very high standards, they have great aspirations. But if this was still one MC, they would have to drag everybody else along with them. And maybe the Tower A owners wouldn’t have been able to afford the service charges. Whereas Tower B, in order to achieve what they want, can expend the necessary funds. This is another great benefit of having a sub MC because you then look after yourself. It’s up to you how well your building does.”

However, there is one downside to the laws surrounding sub MCs, says Khaw. “Only one downside the law has not provided for and I think it will be an area of dispute. Currently, under the law, it says Sub MCs don’t have an office.

“There are other sub MC formations where this is still the main point of dispute. But what they don’t realise is that the law does not provide for them to have an administrative office, it was not covered by parliament. Our solution to this is to rent out an existing office space here.”

On the tenants’ acceptance of a new form of management, Menara UOA Bangsar MC chairman Satharuban Sivasubramaniam says, “To be honest until now, some of them still cannot accept it. They need to get used to it because they are used to paying one bill for so long.

“We’ve had town hall meetings and we regularly try to educate the tenants on how the new management works. We also issued circulars to the owners about what was being done and so forth. So now that the sub-MC has been formed, I think the administrative side has to continue to educate them.”

Before the formation of the sub MCs, for a period of about four years, the development had to go through major upgrades and asset enhancement works, says HBMK associate director Jessie Koh.

“Within the three to four years, almost everything was taken care of. I think the aim was that when the sub MCs are finally formed, you can hand over a building that is functioning properly, with everything properly upgraded and running well, so that the sub MCs won’t have to do too much maintenance. Everything has been renewed.

“It’s like handing over a new property to them and sharing the funds that were already in the main MC’s coffers so that everyone gets a fair share. An amount of RM5 million was approved for these asset enhancement initiatives. The sum budgeted was mainly for refurbishing the common toilets, main lobby, corridors and lift lobbies.”

Other improvements included façade cleaning and repainting, CCTV replacement, installation of the building automation system, water tank replacement, dropper pipe replacement and hand dryer replacement in the bathrooms.

To optimise costs and reduce energy consumption, a few green features were introduced, says Koh. This included a rainwater harvesting system used for watering plants and cleaning the common areas, such as the car park and loading bay; using regenerative drivers of the Hitachi Inverter lift, which uses less energy than other lifts; and the timers for the air conditioners in the lift lobbies.

“We have changed all the lighting to the LED type and with sensors as well. On the Tower B side, all the car parks are now fitted with sensors and timer lighting. We have also replaced the rooftop signage with an LED one. With all these, the total savings is about RM5,000 in electricity bills a month,” she says.

“We are trying to arrange with GSPARX for the Tower B site to be considered for solar panels and green energy. We are now in the process of changing the chillers. We have ordered custom-made chillers that should be able to bring the electricity cost down by quite a margin.”

Menara UOA Bangsar MC committee member Chan Hiew Mun says the Tower B sub MC is planning to do some renovations. “We’re working on upgrading the commercial offices and common areas to a standard where we can increase the rental rates and rental yield as these are very important if we want to drive up the business.”

To ensure the development’s value continues to rise, Satharuban says, “Technically, what tenants expect to have is very high standards of maintenance, such as very clean toilets, cold air conditioning and fresh air. So, these are all in demand. We are targeting this kind of high-yielding tenants so that the value of the entire Menara UOA Bangsar will go up.”

Menara UOA Bangsar’s price psf was RM750 at launch. Comparatively, the average price of the development was about RM983 psf as at December 2023.

The average rental rate at Menara UOA Bangsar had consistently increased each quarter from 2021 to 2023, from an average of RM4.10 psf in 2021 to RM4.89 psf in 2023. The average rental yield stood at 6.26% as at 3Q2023.

“Here, we treat this development like it’s our house … We believe that what makes a property successful is that you must treat it like your own even though you may only have a small share unit,” says Khaw.

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