Pitfalls plague strata-titled malls
The Straits Times
29 December 2014
The blue seven-storey building sticks out like a sore thumb -
algae-covered walls, peeling paint and sleazy pubs occupying its floors.
The Ming Arcade, on the corner of Cuscaden Road in the Orchard Road
shopping district, is a poster child for the woes besetting many
strata- titled commercial blocks.
The 32-year-old mall, which sits on 1,127 sq m of prime development
land, has been put up for collective sale at least three times but
The owners of the 88-unit complex, which is next to the Forum Shopping
Mall, are keen to sell their units to a single buyer and move on but
there have been no takers.
Having too many decision-makers has been the weakest link as the
owners' efforts to sell were thwarted when Hotel Properties, which
holds 52 per cent of the building, reversed its backing for a
A common problem at strata-titled malls, which number around 55, is the
difficulty of getting large groups of people to agree on issues varying
from a price for a collective sale to the upkeep of the property. Such
malls are usually owned by many people, or subsidiary proprietors as
they are called, unlike those run by professional operators like
More strata units have been built in recent years, prompting experts to
warn about the pitfalls of operating in and owning shops at these
As Mr Chan Kok Hong, managing director at Savills Property Management,
put it: "It's every unit owner for himself."
Back in the 1960s when Singapore took steps to develop its shopping
scene as the population and middle class grew, the concept of shopping
malls popped into the head of developers, said Mr Chan.
High Street, North Bridge Road and Orchard Road were the only main
shopping streets then, so local developers adopted the idea of malls
from the United States and Australia.
People's Park Complex was the first strata-titled mall, developed by Mr
Ho Kok Cheong, who was embroiled in a massive corporate fraud case in
2005 and died a bankrupt a year later.
"It was the flavour of the day then; developers were not that
financially strong to be able to build the whole mall and retain full
ownership," said Mr Chan.
"Ho Kok Cheong laid his hands on the site but was not really very rich.
"So he got many people to buy units to finance it and he made the money
It was more a case of profits rather than creating a successful retail
"It's a good business decision. When a developer builds a strata mall,
he's not thinking about the future of the mall; he wants an instant
profit," added Mr Chan.
Lack of teeth
These malls have a management council made up of subsidiary proprietors
to represent owners.
It has powers to manage the strata-titled development, as the Building
and Construction Authority's Building Maintenance and Strata Management
A professional managing agent is usually engaged to advise the
management council on the running and maintenance of the strata
Mr Teo Poh Siang, managing director of property consultancy and
managing agent Wisely 98, noted that a management council is required
by law only to oversee that the "common property" at these malls, such
as corridors, lifts and escalators, are in working condition.
"Its purpose is to collect and oversee funds to do what is necessary to
just maintain the common property," said Mr Teo.
While this means that the building's lifts, lights and escalators are
likely to be working, the management council might not be motivated or
have the resources to keep the mall in pristine condition.
Strata-titled malls, which happen to include many of Singapore's oldest
properties, often fall into disrepair and pale in comparison with
flashy new-style malls managed by professionals.
Management councils, said Mr Teo, do not have the objective of making a
profit, unlike institutions such as real estate investment trusts
With a duty to deliver quarterly results and dividends to its
unitholders, it is in the interest of Reit managers to ensure that
malls are not run-down.
The multiple owners at strata malls also do not always see eye to eye
on the lengths they are willing to go to maintain the property, said Mr
"There will be those who say 'just do the minimum'."