RISING CONDO MAINTENANCE FEES

RISING CONDO MAINTENANCE FEES

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.

Source : Sunday Times – 8 Aug 2010

Unless you have money to burn, these new condos with spurious facilities such as lap pools and water features can burn a hole in your pocket. They may look nice but are expensive to maintain and after a period of time start to look old and dated. Modern designs do not stay modern forever. On top of that, you have a higher plot ratio which translates into smaller common spaces crammed with larger numbers of people. Your idyllic weekend lounge around the pool might be more of a neighbour gawking session with 100 residents jockeying for the 10 available flat beds. You might end up having to do what German tourists do in popular holiday resorts.. come down at 6am and 'chope' the choice deck chairs and flatbeds before anyone else has even woken up!

 If you stay in Tampines Court, it is because you do not wish to have a pool and prefer to have a lower monthly maintenance fee. If you suddenly desire to be within a crowd then all you have to do is walk down to Tampines Mall. If you want a swim, then the Tampines Public Pool is near, Safra is down the road and many private clubs nearby if you care to join; Tanah Merah Country Club, Laguna Country Club, Changi sailing Club, Changi Golf Club and Changi Beach Club. Clubs also charge a monthly fee, but they have many facilities and of course, it is your choice whether to join or not.

Don't you get the impression that all new developments are looking pretty much the same nowadays? They all have that cookie-cutter look which used to be the preserve of city office blocks ; towers of glass and steel of little architectural interest. Gone are the unique designs which differentiated private from HDB and Office Blocks. Why, even new HDB are looking surprisingly like their private counterparts. Why is that? Is it because the HDB has upgraded its image or has the private sector downgraded theirs? Actually, it's both and they now pretty much occupy the same mould. It's becoming quite difficult to tell them apart. Can you spot which three are HDB in the above?

Developers would have you believe that modern designs and mickey mouse apartments and facilities are what buyers really want. People want to spend more on superfluous common property items at the expense of private living space. That people really want to live in close proximity to each other, that people like to be positioned 2 feet away from their flat tv screen on the wall. That waiting in line for the mechanised car lift is preferable to getting in your car and leaving the estate pronto. That you don't need a kitchen at all, all you need is a tiny space for your Bosch dishwasher and European hob. After all, modern families don't cook and certainly don't need a laundry area.

Developers would have you believe that quantum of price is more important than value for money. That if you only have $1million to spend; then they will pitch their smallest size at that  price  to maximise their profit. It used to be size determined the price, now it is price determines the size. For a million dollars; how low can they go - a limbo dance between size and quantum.

Developers go all out to woo buyers with words and pictures which are totally at odds with the final product. Of course it would not matter if you are an investor - churning the property perhaps before TOP - investors buy off the block with hardly a glance at the designs. It is normal market practice for potential buyers to hand over a blank, undated, signed cheque to the agent in order to secure a unit - any unit - in a popular new launch. 

But say you are not an investor, say you are merely someone looking for a single, new home. What do you make of the pictures, the hype, the showroom glitz? You either buy into the 'lifestyle' pitch or look on in amazement at how people completely lose all sense of proportion and leave their mental faculties at the door when entering a show flat. 

Here's a reality check:

It looks quite spacious!

If you bother to ask, you are quietly told that the models are not actually built to scale. 

The facilities are cool

Look again. Imagine what it will be like to actually live there. Can you live with the BBQ under your window? The noise generated from the pool 5 feet from your balcony? The endless waits for the mechanised carpark? The feeling of being enclosed?

The surrounding area is so green and lovely with not another building in sight!

No, it isn't.  Plot ratios of 2.8 and relaxed building rules means there will be very little buffer space between buildings in the same complex and between neighbouring complexes. Look at pics below of new developments in District 15 (taken from Chinese Swimming Club, Amber Rd)