Blueprint for investment

Source : Today – 13 Aug 2010

Question from Bill Tay

I bought a 8,788 sq ft detached house in Pasir Ris Beach Park with a balance of 67 years in the tenure.

Can you advise me on the following:

Is it worthwhile to build a pair of semi-detached houses with a development charge of $150,000 and building cost of $1.5 million?

What do you think is the likelihood that I would be able to top up the lease to 99 years, given that this estate consists of both 99 and 999 leasehold houses.

Do you have any other suggestions besides building a pair of semi-detached houses?

Reply from Mr Colin Tan, head of Research and Consultancy at real estate consultancy Chesterton Suntec International

I am assuming that the information provided by you is accurate; I have not made any checks myself.

If indeed your lease is 99 years with 67 years remaining, the relevant tax for intensifying land use – that is, to redevelop the property with larger floor areas (your suggestion is to build two houses in place of one) – is known as the differential premium.

The corresponding tax for freehold land is called the development charge.

So, for you, the relevant tax is the differential premium. Topping up of the lease involves yet another payment to the Government.

If I remember correctly, the master land owner of the 99-year lease land is the HDB. Please do check with the HDB with respect to the amount of all the taxes.

If I were to put myself in the shoes of the master planner, I would most likely not allow any top-ups until I have firm plans as to what I intend for the entire area. Have a look at the Master Plan for the area in the URA website www.ura.gov.sg.

I would say the chances are slim, mainly because I think the planners are unlikely to have decided on what they intend for the area any time soon.

Most planners prefer to keep their options open for as long as they can if there is no urgency to develop the area. You can check this with the HDB planners.

Also, I see the area as suitable for expanding the recreational space in that part of Singapore. So, the chance of a rejection for top ups is not insignificant.

As a result of the uncertainty – unless you get different feedback from HDB – the properties there are likely to be most suitable for owner-occupiers and renters.

If you can get a better price than what you paid for, you may want to give it serious consideration. Please do engage the services of a property consultant to give you more detailed advice.

Condo comeback

Source : Today – 13 Aug 2010

Government to ramp up flat supply for middle-income home buyers

The executive condominium (EC) market looks set to stir when new projects are launched over the next three to six months. According to property consultancy CB Richard Ellis, ECs are making a comeback after a hiatus of five years as the Government steps in to ramp up flat supply for middle-income home buyers.

Four new EC projects in Compassvale Bow, Punggol Field, Buangkok and Yishun – yielding some 1,400 units – will be launched in the next three to six months.

These sites were awarded in the first half of this year. The Government will also be selling another five EC sites later in the year – at Jurong West, Punggol Drive, Pasir Ris, Tampines and Segar Road – which are expected to yield about another 2,600 units.

The last EC launched was La Casa in Woodlands in 2005, which was completed in early 2008.

CBRE said the comparatively cheaper pricing of ECs is expected to attract a large number of HDB upgraders.

Executive director of CBRE Research Li Hiaw Ho said assuming the historical 30 per cent gap between private suburban homes and new ECs, the median prices of new ECs are likely to stay around $650 to $750 per square foot (psf).

The median price for private suburban homes as of the second quarter stood at $824 psf.

Ms Tay Huey Ying, director for Research and Advisory at Colliers International, expects prices for ECs to rise moderately. “It will still fall below private units in terms of absolute price per square foot simply because there are conditions attached,” she said.

For example, foreigners are not allowed to buy ECs. On top of that, those whose monthly household income exceed $10,000 cannot buy ECs.

Mr Li added that the prices of ECs will match those of comparable private apartments in the same locations after five years, as they will be treated as private properties.

Currently, the non-landed private home market is attracting a lower share of HDB upgraders compared to last year with only 36.1 per cent of them making new home purchases in the second quarter.

At its peak in the first quarter last year, the proportion of HDB upgraders reached 63.6 per cent but it has steadily dipped below the 10-year average of 44 per cent.

Mr Li said with the steep rise in prices of new private homes, more HDB upgraders face a bigger burden of servicing huge mortgage loans.

“The lowering of the housing loan limit from 90 per cent to 80 per cent since March this year also meant that HDB home buyers need to pay more cash upfront,” added Mr Li. “Despite this, HDB upgraders can find a less-costly alternative with the upcoming ECs.”

No bids received for EC site at Jurong West

Despite a buzz generated by a resurgence of the executive condominiums (EC) in the coming months, the Housing and Development Board (HDB) has received no bids at the close of the tender for an EC site at Jurong West Street 42 yesterday.

The land parcel has a land area of over 16,800 square metres and a maximum gross floor area of about 50,445 square metres.

It has a lease period of 99 years.

Launched on July 2, the call for tender closed yesterday at noon.

Analysts said developers are spoilt for choice as the Government has been releasing a lot of land.

Mr Nicholas Mak, a real estate lecturer at Ngee Ann Polytechnic said: “There are also growing concerns that there could be a growing oversupply due to the large amount of land that the Government is offering for sale in the present Government land sales programme.

“In addition, there is also the characteristic of this site, which is that it’s not within comfortable walking distance to the nearest MRT station.”

The second half of this year will see 27 residential sites and four mixed-use sites put up for tender via the Government land sales programme.

The 31 sites are expected to yield nearly 14,000 private residential units. This is the highest potential supply for any half-yearly period since the Confirmed and Reserve Lists system started in 2001.

Dorsett Residences by Tang Suites

Source : Today – 13 Aug 2010

Property developer Tang Suites’ latest project is the six-storey Dorsett Residences, located in Chinatown.

The 68 units have average indicative prices of $1,800 per square foot.

The luxury property is part of a mixed development, which combines commercial retail space with the 285-room Dorsett Regency Hotel.

Buyers can choose from 24 units of one-bedroom homes at 484 to 667 sq ft each, 40 units of 2 bedroom homes at 689 to 1,012 sq ft each, and four units of 2 bedroom-with-study homes at 1,206 to 1,615 sq ft each.

Amenities include a swimming pool and a landscape deck on the third storey, and residents can use the gymnasium and hotel facilities in the adjoining Dorsett Regency Hotel.

All units comprise of quality furnishings and are fitted with good-sized balconies.

The 99-year leasehold property sits atop Outram Park MRT Station and expects its temporary occupancy permit around late 2012 or early 2013.

Speculators – are they making a comeback?

Recent launch prices for condos in outlying areas way above existing properties

The confirmation of the positive numbers for the private residential sector in Singapore for 2Q2010 appears to have unleashed another wave of buying onto the market.

From landed homes to HDB flats, the market is awash with liquidity. My colleagues in the appraisal department tell me that the rising prices for properties not matched by their valuations have not scuttled too many deals.

In the public housing market, higher cash-over-valuation (COVs) on top of higher prices have also not slowed the rise in the HDB resale market.

With so much cash floating around, I have often maintained that the market is always waiting for a good excuse to renew its buying activity.

That excuse was provided within the past two weeks. The Scala, a 99-year leasehold project near Lorong Chuan MRT station attracted hundreds of potential buyers – or over a thousand according to one report – that balloting was needed to sort out who got to enter the showflat first.

Of course, it helped that a private preview held earlier for Hong Leong staff and other buyers meant that about a third of the units had already been sold before the official launch.

The timing of the launch was also spot on as it came after more stations on the Circle Line from Bartley right through to Dhoby Ghaut were opened for public use. This meant that most residents in the area have already had experience using the new line.

Because the Circle Line serves mainly lower population density areas, there is less overcrowding on the trains. This means that most rides are much more pleasant than rides on the older North-South or East-West lines. To be near an MRT station is already a plus, but to be near the Circle Line is a bonus.

In the following week, the preview of The Greenwich condominium caused a rare traffic jam in the quiet Seletar Hills estate. The showflat closed at 2am the following morning in order to cope with the demand.

It has been a while since we saw such frenzied buying activity. Who are these people who stayed up to the wee hours after midnight to book a unit? Are we seeing the return of speculators to the market?

All the signs are there. On a per-square-foot basis, the reported average selling price of about $1,150 psf for The Scala is about 1.5 times the prices of existing apartments in the area.

One buyer was quoted as hoping for a 10- to 20-per-cent increase in prices within two years. This sounds reasonable, until you realise that he is already paying 50-per-cent more than for existing apartments in the area.

The jump in prices are definitely going to flow through into the third quarter private housing statistics.

The launch price for The Greenwich was at $980 psf on average, rising to $1,025 psf over the weekend – a record for a location so far away from the city centre.

One consultant was spot on when he was quoted as saying “the buyers are those who really like this corner of Singapore”.

Yes, it is really in one corner of Singapore. You need to own a car to live there or it can be pretty troublesome. Most residents in the area prefer living in houses rather than apartments. And the reason why they opt to live so far away from the city is because it is the only way houses can be affordable for them.

Why would someone choose to live in an apartment there when there are more than ample choices of apartments closer to the city with a better public transport network.

By any stretch of reasoning, I cannot see how owner occupiers can justify their purchases at these launch prices. It is also a little too much for investors.

That leaves the speculator, someone who plays the odds in the hope that it pays off and pays off really well. By their own reckoning, they need not depend on other Singaporean buyers. After all, the Chinese are coming. And they are known to pay big. Really big.

By Colin Tan, head of research and consultancy at Chesterton Suntec International.

Exec Condo market set to stir with launch of new projects

Source : Channel NewsAsia – 12 Aug 2010

The Executive Condominium (EC) market looks set to stir when new projects are launched over the next three to six months.

According to property consultancy CB Richard Ellis (CBRE), Executive Condos are making a comeback after a hiatus of five years as the government steps in to ramp up the supply of flats for middle-income home buyers.

Four new EC projects in Compassvale Bow, Punggol Field, Buangkok and Yishun yielding some 1,400 units will be launched in the next three to six months. These sites were awarded in the first half of this year.

The government will also be selling another five EC sites later in the year – at Jurong West, Punggol Drive, Pasir Ris, Tampines and Segar Road – which are expected to launch another 2,600 EC units.

The last new EC launched was La Casa in Woodlands in 2005, which was completed in early 2008.

CBRE said the comparatively less expensive pricing of ECs is expected to attract a large number of HDB upgraders.

Executive Director of CBRE Research, Li Hiaw Ho, said assuming the historical 30 per cent gap between private suburban homes and new ECs, the median prices of new ECs are likely to stay around S$650 to S$750 per square foot.

He added that the prices of ECs will match those of comparable private apartments in the same locations after five years, as they will be treated as private properties.

Currently, the non-landed, private home market is attracting a lower share of HDB upgraders compared to 2009, with only 36.1 per cent of them making new home purchases in the second quarter.

At its peak in Q1 last year, the proportion of HDB upgraders reached 63.6 per cent but it has steadily declined below the 10-year average of 44 per cent.

Mr Li said with the steep rise in prices of new private homes, more HDB upgraders face a bigger burden of servicing huge mortgage loans.

Another factor pushing them towards ECs was the lowering of the housing loan limit from 90 per cent to 80 per cent since March this year, which meant that HDB home buyers need to pay more cash upfront.

Quiet month expected for property sales

Source : Straits Times – 11 Aug 2010

Ghost festival and lack of big launches spell lean month ahead, say experts

SUPERSTITION is likely to get the better of some buyers during the rest of this month as the effects of the traditionally quiet Hungry Ghost Festival begin to be felt.

During the festival – which started yesterday and will last until Sept 7 – superstitious individuals shun major commitments such as buying a property or getting married. And experts predict that this year’s festival looks set to spell a lull in sales amid a lack of new major launches.

This time last year, NTUC Choice Homes defied superstition with the successful launch of its 590-unit Trevista in Toa Payoh.

But it is unlikely there will be any similar major launches to buoy sales during this year’s festival, experts said.

City Developments’ 642-unit Pasir Ris project is planned for release in the current quarter, but no firm date has been given. No major launches were staged over the weekend.

Mr Peter Ow, managing director (residential services) at Knight Frank, said: ‘This year’s Hungry Ghost month will be quieter because whatever needs to be launched has already been pushed out.’

There were a few new launches in the run-up to the festival, with many units snapped up.

Yesterday, Far East Organization reported brisk pre-festival interest over the past week in The Greenwich in the Seletar Hills area.

Another 94 units of the 319-unit project were sold following the start of a private preview on Aug 2, when it moved 80 units. It has sold 174 homes in total, with the average price achieved rising to $1,025 per sq ft from $980 psf last Monday.

Nearly half of the units sold have been one-bedroom units of 603 sq ft to 721 sq ft, priced from $657,000 to $850,000.

Far East said it was on course to launch the project early next month.

At the 46-unit Suites@Topaz in Potong Pasir, there are just a few penthouses left after sales started around the middle of last week, said an industry source.

He said there may be some project launches of fewer than 200 units each this month, if developers are able to get all the necessary documents in place.

Meanwhile, the 172-unit Terrene sold its remaining unit last Saturday. And Hong Leong Holdings said it sold 35 units of its 468-unit The Scala over the long weekend, leaving fewer than 15 units left.

Mr Steven Tan, executive director of OrangeTee’s residential division, thinks it is sentiment and a lack of major new launches, rather than superstition, that will underpin the predicted quiet August.

‘Nowadays, people don’t really care about the Hungry Ghost month. It’s all about the sentiment, which is not very strong at the moment,’ he said.

And experts report that sales have generally slowed because developers are holding their prices.

‘If I am pricing a project to sell, I would push it out now. There will be interest. But if I want to hit benchmark pricing, I have to be careful with the timing of the launch,’ said Knight Frank’s Mr Ow.

He pointed out that developers had no need to rush given that they are depleting their land banks.

‘With recent tender prices being so high, there is even more reason for them to hold back their launches to wait for firmer prices,’ Mr Ow said.

All 174 units in Phase 1 of The Greenwich fully sold in private preview

Source : Channel NewsAsia – 10 Aug 2010

All 174 units in Phase one of The Greenwich, at Seletar Hills, have been fully sold in a private preview since last Monday.

Private property developer Far East Organization said the 174 fully sold units make up 55 per cent of the 319-unit development.

The Greenwich consists of 12 five-storey residential towers, with one to three-bedroom apartments ranging from 603 square feet to 1,485 square feet.

The prices range between S$657,000 and S$1.4 million.

The average price is S$1,025 per square foot.

Far East Organization said nearly half of the units sold are one-bedroom units.

It added that many buyers are attracted to the SOHO-type home office configurations of these apartments.

With this strong interest, Far East Organization said it will be bringing forward the official launch of this project to early September.

It’s now taking in registrations of interest for Phase two.

The Greenwich will be completed in 2014.

Naung Court in Hougang trying for en bloc sale

Source : Channel NewsAsia – 10 Aug 2010

Naung Court, a freehold residential development in Hougang, is trying for an en bloc sale.

The indicative price for the land is between S$28 million and S$30 million, which works out to about S$650 to S$700 per square foot per plot ratio.

A development charge of some S$2.7 million will be payable.

The site, located along Upper Serangoon Road, is 32,689 square feet in size.

It has a gross plot ratio of up to 1.4 and can be built up to 5 storeys. This will yield a potential gross floor area of 45,764 square feet.

Marketing agent Jones LangLaSalle said the site can potentially yield some 45 apartment units with an average size of 1,000 square feet each.

Naung Court is currently a 4-storey residential block comprising 20 units and within walking distance to Hougang Central.

The tender for the site will close at 3pm on September 14.

Increase in landed home purchases by foreigners

Source : Business Times – 10 Aug 2010

But acquisitions of private apartments and condos slip 7.4% in Q2

Foreigners including permanent residents bought 81 landed homes in Singapore in the second quarter of this year, up from 69 in Q1. And the Q2 figure is the strongest quarterly showing since Q2 2007, according to Knight Frank’s analysis of URA Realis caveats information up to July 30.

District 15, which includes Katong, Telok Kurau and East Coast Road, overtook District 4 – where transactions are predominantly at Sentosa Cove – as the most popular district among foreign buyers of landed property. In Q1, District 4 was most highly sought after by such foreigners.

While foreigners picked up more landed homes in Q2 than Q1, they bought fewer private apartments and condos. The number slipped 7.4 per cent, from 2,261 units in Q1 to 2,093 in Q2, according to Knight Frank.

But Singaporeans bought more non-landed private homes in Q2 – 5,732, versus 5,315 in Q1.

Knight Frank chairman Tan Tiong Cheng said foreigners’ strong interest in landed homes reflects their growing recognition of such assets as a prized commodity in land-scarce Singapore.

‘The increased interest is not surprising as landed housing offers many foreigners a lifestyle closer to what they are used to in their home country,’ he said. ‘The added attraction is that Singapore is a very safe place, so landed housing is as secure as, say, a gated community.’

William Wong, managing director of RealStar Premier Property which specialises in selling landed homes in east and central Singapore, said permanent residents (PRs), after living in Singapore for a few years, tend to realise it’s worthwhile investing in landed property.

‘Bungalow prices (on per square foot of land basis) are still lower than apartment and condo prices on psf of strata area in the same location,’ he said.

‘On top of that, the supply of landed homes is more limited than that of condos and apartments. Landed homes also tend to maintain their value better, as the main component of, say, a bungalow’s value would be the land it sits on, whereas apartment and condo values may depreciate faster as the property ages.’

PRs who choose landed property can easily get access to the facilities they would enjoy in a condo – such as a big swimming pool and gym – by joining a club, he noted.

Mr Wong said landed property transactions started to pick up in June-July, after a slow period in March-May. ‘In District 15, bungalows in the Mountbatten and Meyer road areas can easily sell for about $1,000-1,100 psf of land today, compared with around $900 psf towards the end of 2009,’ he said.

‘In District 10, say in Coronation Road or Namly Avenue, a bungalow may cost about $1,200-$1,300 psf-plus today, up from $1,000-1,100 psf late last year.’

Besides an increase in the number of landed homes bought by foreigners in Q2, Knight Frank’s report shows their share of total landed home purchases here rose from 6.3 per cent in January-March to almost 7 per cent in April-June.

The latter figure is a tad below an 8 per cent share in Q1 2007 and Q2 2008.

The 150 landed properties bought by foreigners in the first half of this year accounted for about 6.6 per cent of landed home deals in the period. On an annual basis, the share has ranged from 3 per cent in 1996 to 9 per cent in 1995 and 1997.

Knight Frank’s analysis also shows PRs acquired 132 of the 150 landed homes bought by foreigners in the first half of this year.

The other 18 were bought by non-PR foreigners. This is not surprising as on mainland Singapore, being a PR is one of the major criteria a foreigner has to fulfil before being allowed to buy a landed home.

Sentosa Cove is the only place in Singapore where non-PR foreigners are allowed to buy landed homes, but this is still subject to approval by the Land Dealings (Approval) Unit, among other conditions.

Can the little red dot expand?

Source : Sunday Times – 8 Aug 2010

Space for new townships could open up in the north-east and west. But will hometowns still look the same? TessaWong talks to experts to find out

More unique flats with creative details

· Grace Fu, Minister of State for National Development

I think (in the future) the economy will be more differentiated. I think that aspirations are higher and we are looking for uniqueness (in housing design) now.

I think the Government will create that kind of identity through some differentiation in the aesthetics, because I think increasingly that’s going to be important.

For example, in Europe, I’ve seen pictures of (new) photovoltaic cells. You know photo cells, they look quite boring, grey and flat. But I’ve seen what’s being researched now – you have coloured photovoltaic, almost like a film, which you can lay on any facade and make it part of your design feature.

So you can have a very colourful (housing) block full of photovoltaic cells. We have to achieve this kind of distinction in design while containing the costs as much as we can.

Putting underground space to more uses

· Hwang Yu-Ning, group director of physical planning, Urban Redevelopment Authority

To expand our space supply, we will continue to explore greater use of our underground space – beyond the MRT, basement shopping malls and underground pedestrian networks such as those in Orchard Road and Marina Bay.

For example, we could study whether certain industrial, utilities, commercial and other suitable uses could be built underground in basements or caverns. The central and western parts of Singapore are potential areas where more caverns could be built as the geology is favourable.

As for the Southern Islands, they are envisaged more for recreational purposes, so there is not much residential development at this point. The islands are largely undeveloped and have a rustic character, providing a different kind of recreational experience from what is available on the mainland.

Under the Master Plan 2008, we are developing areas like Kallang Riverside and Paya Lebar Central now, over a period of 10 to 15 years.

At Kallang Riverside, we will see waterfront homes with a beachfront setting developed on the west side of the river, while the east side will have quality office space with hotels, entertainment and retail offerings.

Some of the old airport buildings in Kallang will be conserved and developed as a lifestyle spot. By the end of next year, we should have put together its development plans.

At Paya Lebar Central, we will see more offices and educational institutes. A new civic centre will also be developed that could include a community centre and a public square.

Closer, shorter blocks – for sustainable growth

· Vikas Gore, director at architectural firm DP Architects

There’s been a set of objections that’s been around for a long time – that the way we do high-rise housing is not particularly sustainable from an energy and resource-consumption standpoint.

High-rise is extremely expensive to build and maintain. You need lifts and a lot of electricity to keep all the elevators running. Water has to be pumped to the top too.

If we do more low-rise housing, like four or five storeys, where we need lifts mainly for the elderly, we could probably build larger apartments and still have high densities. We would occupy more of the land than we do at present.

The typical HDB estate would have buildings much closer than they are now, yet feel greener – because everyone would have a little green patch in front of their apartment, and would need to walk only two levels down to the ground, or walk up two floors to the roof garden.

Doing housing that is, say, four storeys high instead of 20 doesn’t mean you can get only a fifth of high-rise density. You can get close to 60 per cent to 70 per cent.

Truly green town within reach

· Peter Head, director at engineering firm Arup who leads its global planning business

Singapore is presenting leadership in eco-city development in China and has the skills to showcase this at home. Also, an eco-community could encourage new businesses in green products, with Singapore’s brilliant young product designers.

Our experience from China suggests that a low-carbon, resource-efficient and low ecological-footprint community could be planned and built starting now. There are investors and developers who would be interested in creating this.

There is already good public transport access – MRT stations are within a short walking distance.

But more could be done, such as mixed-use villages catering to about 20,000 people – with social services, and good public transport access within.

An eco-town should be highly accessible with local jobs. It would be best if it were close to the city, instead of being on outlying islands.

Buildings could be designed to capture breezes without unnecessary exposure to traffic noise and pollution. Natural ventilation could predominate building design, with some cooling potential using energy from waste.

Freight deliveries could be made from a consolidation centre using electric vehicles. The community could be the first to be offered use of electric cars on a large scale. Power for this could come from energy produced by waste plants.

Grace Fu on housing: Land use will always be a critical consideration

Source : Sunday Times – 8 Aug 2010

Q: The state does have a major role in deciding how a large percentage of citizens live, given that 80 per cent of us live in HDB flats. Do you think this will change?

I think we can answer that through two perspectives. One is whether the Government will have a big role in deciding our living conditions. The second is whether public housing will still cover such a large proportion.

To the first question, I think the answer is yes, because land use will always be a critical consideration because of the constraints we have. So whether it is planning for private or public housing, how we place them, in terms of the height, the density – I think the Government will continue to have a big influence.

The second issue is whether public housing should really be provided for such a large segment of the population. One group says, perhaps Singaporeans are more qualified now and therefore they should want to decide how to live, where to live, and so on.

On the other end, there are those who say, please raise your income ceiling for subsidies because although I’m earning $8,500 or $9,000, I still want to live in an HDB block as it’s an affordable option.

So we always have to balance between these two groups. And it depends on what the people want ultimately. We have to make the judgment whether that coverage will go up or down over time.

Q: Has there been a shift towards one end of the spectrum?

Yes, it has moved towards allowing more private-sector participation, in the form of the Design, Build and Sell Scheme. We also have this Executive Condominium group, for which we are releasing more sites. So that is something we will continue to do.

We are very mindful that when we cover 80 per cent of the population, the 80 per cent is a very huge group, and the lowest 10 per cent is different from the 70th to 80th percentile. It could be very different in terms of their earning potential, their aspirations, their mobility. So our housing policy will have to, in a way, cater to the different segments.

Q: But there has been discontent on some level about rising housing costs.

Obviously, the market goes through boom and bust. So in a rising market, we get many anxious applicants wanting flats immediately.

Some people have proposed, oh, why don’t you lift that $8,000 income ceiling.

But we decided not to because if we increase the income ceiling, then we are actually allowing a segment with higher income to compete with the ones earning $8,000 and below.

We decided that is not the way to go, but what we should do is really to help people at the lower end of the income segment.

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.