Rising condo maintenance fees

Source : Sunday Times – 8 Aug 2010

Rising labour and utilities costs, shortage of security guards and management pushing rates up

New condominiums offering a wide range of facilities like swimming pools, saunas, manicured gardens, children’s playgrounds and round-the-clock security can attract buyers like bees to honey.

But these facilities do not come free. Owners have to pay maintenance fees to upkeep them, even if they may never use the facilities.

And now that costs have generally risen, owners may have to be prepared for slightly higher fees ahead.

Nevertheless, experts say the fees are put to good use as they go towards maintaining the value of the property.

‘Nothing is free. If you are going to buy a condo unit but are not going to swim, you will still have to pay to help maintain the pool,’ said Mr Jordan Neo, managing director of Knight Frank Estate Management.

Industry experts say that rising labour and utilities costs, coupled with a shortage of licensed security guards and condo management staff, will contribute to rising fees.

This year, costs have already risen by about 5 per cent to 7 per cent, said Mr Chan Kok Hong, managing director of CKH Strata Management.

Mr Derek Soh, Jones Lang LaSalle’s head of property and asset management in South-east Asia, predicts that owners may have to pay about 3 to 5 per cent more in the coming year.

A landlord of a Grange Road apartment, Mr Eugene Goh, is not too happy about it: ‘I pay $1,000 every three months for my two-bedroom unit at Spring Grove. As to whether it is worth it, only my tenant can tell.

‘He comes screaming to me for help each time something is not working, even though he can approach the management office.’

But Mr Chan pointed out that it is important to understand that a property purchase is an investment, whether it is for rental or owner occupation.

‘A poorly maintained property will bring down the value of the property, resulting in a lower resale price or rental value,’ he said.

While many residents may not make use of the condo facilities, they will still want the pool, gardens and other areas to be well maintained, he said.

For those who do not wish to pay high maintenance fees, Mr Chan’s advice is: Buy units in condominiums that do not have so many facilities or elaborate water features and gardens, which can be costly to maintain.

‘These features and huge pools need water treatment, maintenance and frequent replacement of pumps. There’s also the cost of electricity for running the water features,’ he said.

Generally, the cost of maintenance is ‘directly proportional’ to the number of facilities that a condo has.

‘The fees at condos with elaborate clubhouses, air-conditioned karaoke and reading rooms, multi-purpose halls, saunas and bowling alleys are definitely going to cost more,’ Mr Chan said.

Buyers should know that these facilities require not only maintenance, but also the replacement of equipment.

The typical fees for a mass market condo unit with full facilities can be about $250 a month. But the fees for luxury condo units in districts 9 and 10 such as

Ardmore Park, Draycott 8 and The Claymore can be around $1,000 a month or more.

For instance, the monthly fee for the smallest unit at Draycott 8, said an owner, is $1,070. Draycott 8 owners are also paying for a concierge service, Knight Frank said.

Many properties in districts 9, 10 and 11 are kept for investment, and their owners are thus more willing to spend on maintenance, it said.

The fees in mass market condos are usually much lower as these tend to appeal to HDB flat upgraders, who are used to paying a moderate fee, it added. These are generally larger developments with many units, and the fee per unit is therefore lower because of economies of scale. Also, the standard of services provided can be expected to be lower than that in high-end condos.

For instance, a guard at the main entrance can cost $10 a unit for a 200-unit condo, or $20 a unit for a 100-unit condo, Mr Chan said.

Also, the fees are definitely higher in estates that boast private lifts for every unit, for example.

Condos with private lifts and air-conditioned lift lobbies can cost owners at least $150 more a month in fees.

Those buying new condos can get an estimate of the monthly fees from the developer. At the recent launch of The Minton, a large suburban condo in Lorong Ah Soo, maintenance fees have been estimated at $190 to $350 a month, depending on the size of the unit.

The fees in a private development are set by members of its management corporation strata title-owners who have been duly elected by the rest of the owners.

Besides maintenance fees, there is also the contribution to the sinking fund, which goes towards major expenses incurred in repairs and replacements like repainting the external walls, re-roofing and replacement of pumps.

Average Rates

Here is a rough guide to average condo maintenance fees per month:

· Mass market condos with more than 200 units: $200 to $300

· Mid-tier condos with fairly large grounds: $500 to $700

· Luxury-end condos: Around $1,000 or more

CKH Strata Management says there is no typical average sum for sinking fund contributions, though mass market condo owners usually contribute about $250 to $350 a month for maintenance and to the sinking fund.