By Alistair Walsh
13th November, 2013
Owners corporation managers are becoming involved in residential developments earlier and earlier on, according to Andy Dawson, managing director of Engine Property Group.
Dawson spoke to Property Observer as part of our Day in the Life series.
As soon as planning permits are approved for large residential development, owners corporation managers can become involved providing feedback on how the building will work.
The role has extended far beyond that of being just a strata manager and now involves consultation on laws, lay-out, and structure of residential buildings from day one.
“If you break down from our perspective what we actually do, right from the moment that the actual town planning permit is issued and there are architectural drawings we’re asked to have a look at the drawings, to look at the machinations of the building, look at how many buildings there are, what type of amenities there are, how we actually structure the owners corporation,” Dawson told Property Observer.
New developments, prestigious and otherwise, have more and more common spaces. Banquet kitchens are the norm these days, buildings aren’t complete without their own cinema, and shared rooftops are now almost as important as what is in the newly completed apartment.
But with that rise of shared spaces comes the added burden on the owners corporation for managing and funding them.
The organisational and technical infrastructure required far surpasses what was required in previous styles and require a far larger owners corporation.
Working out the operational costs of these spaces is integral to maintaining body corporate fees at their advertised rate, and working this out takes months.
Dawson says larger firms are generally able to keep body corporate fees within 10% of the advertised rate even after several years.
“We have to set quite reasonably budget allocations so incoming purchasers know what the level of the owners corporation fees are.”
The increasing complexity of developments also means there is an increasing number of owners corporations for each development. It’s common for them to have eight different bodies for one development.
“They’re a function of cost centres they don’t want to be paying for the costs of a person living in another tower.”
Day in the life
8.30am: Get to work and check emails
9:30am: Meeting with managers to organise staff for upcoming hand-over of development
11:30am: Site visitation to Tip Top development in Brunswick. Discussions with developers on how to approach owners corporation structures.
12:30 Lunch meeting with an architect on the design of a communal kitchen
14:30 Meeting the building manager of 27 Little Collins Street on how to move 170 people into the development, using just one goods lift, without disrupting the operations of the Sheraton Hotel.
16:00 Meeting with Engine’s Lawyers to develop presentation on the legal obligations of a developer in an upcoming site
Alistair: Prestigious new developments these days seem to offer more and more shared spaces, from rooftop cinemas, massive gyms, beautiful gardens and banquet kitchens but this drive towards shared facilities requires a sleeker much more engaged owners corporation structure to manage these spaces. We spent the day with Andy Dawson, head of Engine Property Group to talk about how they manage this emerging breed of new developments.
Andy: Engine Property Group is a property asset management company. We look after every aspect of property save and except sales and rentals. So when common property is created an owners corporation is deemed to exist and the owners corporation is the owners and they can own a multi-level residential tower or they can own an estate or a planned-community and we assist them with their functions under the act to fulfil the repair maintenance of common property and enforcing the rules and regulations in that environment.
Alistair: So which sort of developments do you cover?
Andy: We’ve got some beautiful sites, we have some beautiful established sites. We have representation at New Quay, the Nolan Tower, Royal Domain Tower, we have properties in Port Melbourne, Bay Apartments and out to the east we have Mitcham Village. We have wonderful estates Solomon and Allamanda. Out in the east we have Marriot Waters and we’ll be taking a trip today to a beautiful development, probably the most prestigious development in South Yarra which was delivered by Little Property which is Ilk.
Alistair: What’s changed in the industry?
Andy: You could purchase an apartment back in the early 80s and upon settlement you receive your owner’s manual and your keys and you would arrive at the apartment complex and possibly be met by a retired bank manager. Your movement would be organised. Now the delivery of service is at such an acute level that we have worked so hard and can see the high level development companies that attract purchasers. Their service proposition with regards to delivery has increased because apartments are now seen as homes, buildings are now seen as communities. The level of owner occupier is significantly higher. If you break down from our perspective what we actually do, right from the moment that the actual town planning permit is issued and there are architectural drawings we’re asked to have a look at the drawings, to look at the machinations of the building, look at how many buildings there are, what type of amenities there are, how we actually structure the owners corporation. It’s not unusual in these larger developments to have anywhere from six to eight owners corporations and they’re a function of cost centres they don’t want to be paying for the costs of a person living in another tower. So we have to have a look at the structure of the owners corporations, the cost allocations. We have to set quite reasonably budget allocations so incoming purchasers know what the level of the owners corporation fees are.
Andy: So if you can imagine, you’ve purchased your apartment, you move in, and then you arrive at the apartment complex and you’re met by one of our team who’s the building manager. There’s been a lot of lead-up work for two to three months to that particular point in time. So someone comes in and straight away they feel the building is clean, safe, it’s secure, it’s compliant, and they can go to their website. They can have a look at how to book into the movie theatre, the barbeque area, how do I go about this, what are the rules, what can I can’t do, who do I contact? It all augurs well for maintaining that higher standard. And we’re lucky enough to be working with groups that are continually evolving up and we’re continuingly evolving up. So that’s our significant point of difference and that’s where I see our industry as going.
Alistair: So where are we heading?
Andy: Toorak Road, the new very prestigious Ilk development that’s been recently handed over by Little Property.
Alistair: So you’ve been working with Little Property for a while?
Andy: Yeah we’ve got a great relationship with Little. We’re very fortunate to have tremendous relationships with a lot of high end developments. We try and work really hard. We have our scabby knees but we try and work really hard to maintain the respect and deliver in accord with their expectations and purchasers’ expectations.
Andy: It was delivered in stages. The first stage was end of June early July; the second stage was end of August. And that’s getting nearly 400 people into a building over that period of time.
Andy: We’re standing on the ninth level of Ilk Tower. Which is Little, in South Yarra’s development. So there are six owners corporations at Ilk. We’re standing on one owners corporation here which the residential towers share. Which is the common amenities here, it’s a beautiful entertaining area where people can have their own private parties, catering, bring in a chef, over there we have cinemas, barbeques, it really is well done. But the point I’m making is it’s a common property and an owners corporation. Above us is the North Tower, that’s an owners corporation. Below this slab is the South Tower, that’s an owner’s corporation. The point I’m making is the people in the South Tower don’t contribute to the costs of the people in the North Tower but they share the costs of these cost. We have a retail component and we have a car park component. But again the whole process of bringing a $100 million plus building on stream, in anticipation of 400 residents where you know that people have just experienced that journey I’ve spoken about with regards to customer relations. It’s so critical for us to hit it right.
Andy: Behind the scenes, behind that area there is plant and equipment. And that plant and equipment is being loaded up on building management system so we know who the core supplier is, who the manufacturer is, what types of warranties are involved, both from a manufacturing perspective and from a service perspective. And that is so important. People don’t think of this, they think it might just be heating and cooling equipment. But the reality is, if something goes wrong and you just have a strata manager who gets the call they might just ring a contractor to come and fix it. But from our office we know who to go directly to. We know who the service providers are and all that is a function of not breaching warranties. And again that’s a function of cost saving. So it’s a situation of managing a building parcel in its entirety rather than just having one particular discipline which is strata management.