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

There are not many high-rise strata residential properties in town whose fund surplus is strong enough to comfortably provide several months’ worth of service charge waivers every year. The Pearl @ KLCC is one of those.

Located in Jalan Stonor, The Pearl is a luxury condominium comprising 179 units with built-ups ranging from 3,109 to 11,312 sq ft. The 1.7-acre freehold property, developed by Malton Bhd, was completed in December 2011 and has been exclusively managed by Henry Butcher Malaysia (Mont Kiara) Sdn Bhd (HBMK) since October 2017.

HBMK associate director Lee Siang Ling says The Pearl is the only property in the property and facility manager’s portfolio that provides two to three months of service charge waivers to good paymasters every year since 2016 “and still has a very healthy surplus increase each year”.

“Plus, the building is already 13 years old and we have done most of the capex (capital expenditure) maintenance, such as repainting and waterproofing, and we’re currently in the process of upgrading the lifts,” says Lee.

In fact, the management corporation (MC) recently reduced the service charge, inclusive of the sinking fund, from the original developer-imposed 55 sen psf to 40 sen psf in lieu of waivers. “While most properties are increasing their service charges due to the electricity tariff hikes, inflation and minimum wage adjustments, among other things, The Pearl was able to reduce the service charge because the MC opines that the funds are very healthy and that most of the major projects have been carried out.”

The Pearl’s MC chairman Ben Chong says some may argue that the original service charge was too high. “But that might not be the case as it was among the most competitive in the KLCC market. Also, I would say that one of the right decisions that the MC made was not to rush to reduce the service charge, even though we could have done that back in 2016 and 2017. So rather than reducing the service charge [then], we managed to build up a healthy surplus, which brought with it compounded benefits.

“Having a healthy surplus is good, but having the surplus grow each year without a sense of direction is also pointless, as we are not a business organisation but here to take care of the building. So having factored in the building’s financial sustainability, we find that we can still reduce the service charge.”

How did The Pearl manage its funds so prudently? Chong says it boils down to good governance. “We have managed the place well, we’re using our funds correctly, we’re getting good and competitive rates from our service providers, and there are no leakages.”

He adds that having a team of dedicated staff is also key.

At The Pearl, the building maintenance team as well as its service providers have pretty much been the same since 2016, says Lee. “This makes a lot of difference. We always say we have to grow up and grow old together with the building. This is important because when we know the building well, we can do what’s best for the building.”

She adds that the MC’s clear direction is also key to the good management of the property. “I would say that, having managed so many buildings, The Pearl’s MC is one of the few that has a very clear vision and mission. Property managers are just there to enforce or implement an action, so having decision-makers with a very clear objective and with joint effort will bring us better results.”

“I think it goes both ways,” Chong adds. “For it to be sustainable, the MC and the building managers must be [aligned].”

The Pearl won Silver at The Edge Malaysia Best Managed & Sustainable Property Awards 2024 under the 10 Years and Above — Multiple-owned Strata Residential category. The property previously took home a Bronze in 2019 under the Below 10 Years — Multiple-owned Strata Residential category.

The Pearl exudes an air of opulence and hospitality, from its grand lobby with koi-filled ponds to the concierge, doorman and attentive security personnel.

The grand lobby was refurbished in 2019 to set the tone for the living experience at The Pearl. “This was one of the significant projects we did to maintain the building’s competitiveness in the market,” says Lee.

“The other thing we did was improve the concierge services because we understand that the service level expectations for this high-end property are different. Previously, the concierge could only speak English but our concierge today can speak multiple languages including Malay, English, Chinese, Thai and some other dialects and help residents with parcel collection, notify residents of parcels and help residents arrange additional services such as laundry, housekeeping and car services.”

The service level that Lee mentions caters for The Pearl’s affluent resident profile, comprising mainly families of VVIPS, ambassadors, expatriates and professionals from the oil and gas and banking sectors. The building is currently 82%-occupied, of which 64% are tenanted and 36% are owner-occupied. Of the total tenants, 60% are foreigners and 40% are local, whereas 58% of the owner occupiers are foreigners and 42% are local residents.

The concierge also provides guided tours of the property when a new tenant or owner moves in. “This is a very original concept that has been initiated at The Pearl, whereby the concierge is trained to welcome new residents, bring them on guided tours and introduce them to the house rules and facilities. The concierge is also trained to know all the residents by name and the unit they live in,” says Chong.

Apart from the lobby and concierge upgrades, other improvements HBMK oversaw in the last five years include new electric vehicle (EV) charging stations, CO2 cylinder replacements, external facade cleaning, car wash upgrades and implementing a new web-based residents portal for easier communication with residents and administration.

The building, meanwhile, is in the process of having its lifts refurbished. “Of the 10 lifts, we have already upgraded six. We’re planning to do two lifts each year and to complete this modernisation exercise in two years,” says Chong. “Previously, we had a lot of breakdowns with the lifts but after we started the upgrades, the improvement was very significant.”

Chong explains that implementing a reward and penalty system tied to the management’s key performance indicators (KPIs) has been instrumental in the performance of the lifts. “When the service provider doesn’t achieve the targets, 10% comes out of the service contract value, and if the performance target is achieved, the service provider will qualify for an additional 10% bonus. We measure this every month.”

Implementing KPIs started when HBMK took over the management of the property, Chong says. “Previously, we had some big issues, especially with the non-performance of equipment and lifts always breaking down. When Henry Butcher came in 2017, we started on a journey and a process to be driven by KPIs and a few things were set for that year, including improving our occupancy to at least 70% and attaining The Edge Malaysia Best Managed & Sustainable Property Awards. Sustainability involves planning and basically having a goal in mind. And in 2019, we got the award.

“Fast forward to now, our current occupancy level is the highest in the past six years and we have been conscientiously following the programme and meeting the performance targets, which, thanks to HBMK and its dedicated staff, we can to an extent look at the KPIs each year to see how we’re doing and move the goals a standard higher.”

Challenges are part and parcel of life and property management.

One of The Pearl’s main challenges is misleading listings made on property websites, says Lee.

Chong adds: “Some property agents would list units at prices very much lower than the market rate; it’s their business strategy. And the owners are not aware of this. This is very bad for the entire property. So we’ve started this project rescue initiative at the direction of the MC to monitor all these listings and call and report them to be taken down.”

“We actually check with the owners if they are genuine advertisements, and if they are not genuine, the owners will give us the direction to get them taken down.”

The team at HBMK also keeps the owners abreast of current market prices and rents from time to time. “A lot of the owners here are foreign-based, so they rely on agents. So if the agents are not professional in doing their job, then information can get distorted,” explains Chong.

Following this initiative, Lee says rents at The Pearl have also picked up. “The average rent is around RM3 psf and up to RM14,000 per month depending on the size, furnishing and where the unit is facing. The average transacted price has also increased from RM667 psf in 2021 to RM888 in 2023. The current rental yield is around 5% to 5.43%.”

Ensuring a healthy collection rate is also key to safeguarding the property’s financial sustainability. The Pearl’s collection rate is 80% to date, thanks to the team’s proactive debt recovery procedure. “We proactively approach owners who have defaulted on their payments as we have a number of foreign-based owners but we don’t have many of such cases. So we have a very good collection rate.”

Other than prudent fund management, optimising operating costs also plays an important role in ensuring a property is well managed and sustainable. Cost optimisation strategies implemented at The Pearl include installing LED lighting, timers and sensors in the common spaces; water conservation and pump monitoring; and ensuring the HVAC (heating, ventilation and air conditioning) system is running at optimal energy efficiency.

“The cost optimisation strategy for electricity alone had helped us save 40% of the electricity cost per month before the change in tariff,” says Chong. He adds that the team is looking into incorporating more technology to reduce operating costs such as facial and car number plate recognition systems as well as robot cleaners.

To further future-proof the property, there are plans to upgrade the entire recreation and facility floor on Level 8, which houses facilities such as a 38m infinity pool, jacuzzi, sauna, gym, children’s playground, water features, massage room, barbecue pit and cafeteria.

“It’s a big project, but then again, the building is more than 10 years old, so it’s high time and good that the common facility floor has a new lease of life. We think it’s important to update and upgrade to stay competitive with the new buildings coming up around us,” says Chong.

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