New Reporter
11-12-23, 14:13
Condo maintenance fees on the rise, set to go higher as costs climb
Dec 08, 2023
MAINTENANCE fees at private condominiums have crept up over the past decade, and are set to increase further as labour, materials and utilities costs continue to rise with overall inflation.
Private homeowners across the island have seen these fees go up – by up to 30 per cent in some condos – over the last 10 years. At some older luxury condos, owners are now paying up to S$2,000 a month.
Owners pay fees to cover the costs of maintaining and managing the common areas and facilities of the property such as swimming pools, fitness facilities, landscaped greenery and security.
Andy Lim, managing director of facilities management company Ocean IFM, attributed the steady rise in fees to increased manpower and material costs, as well as higher-priced contracts for security, cleaning and landscape services. Maintenance costs are expected to go up further in the coming year with the progressive wage model (PWM) in place, he said.
The model is a wage ladder for certain lower-wage sectors – such as cleaning, security, landscape, lift and escalator, and waste management. For instance, starting from July this year, baseline salaries for up to 3,000 waste-management workers would be bumped up, increasing yearly over six years. Entry-level wages are set to grow 48 per cent in five years, from S$2,210 in 2023 to S$3,260 in 2028.
Hike in tariffs
In October, the National Wages Council also proposed a 5.5 per cent to 7.5 per cent pay hike for workers earning a gross monthly wage of up to S$2,500 – the threshold of the 20th percentile wage level of the workforce.
Higher electricity and water tariffs have also raised costs, said Evelyn Chang, director of Absolut Properties.
Water prices were raised by 30 per cent over two years from 2017, and are set to increase by another 18 per cent in the next two years. And for the fourth quarter of 2023, the electricity tariff will go up by an average of 3.7 per cent from the previous quarter. “We anticipate an increase in the management and sinking funds of about 3 per cent to 5 per cent yearly,” said Asia Properties and Assets Consultancy.
Condo fees include both payments towards a management fund (MF), which caters to day-to-day operation expenses, and a sinking fund (SF) for capital expenditure, such as repairs and new facilities. Actual fees paid by owners depend on their share value in the property, which is tied to unit size. The condo’s size and age, type of facilities and qualitative factors such as the design and layout also make a difference.
Lim at Ocean IFM said that maintenance fees at some properties have risen by at least 25 per cent in the last decade.
When the 1,145-unit The Minton in Hougang was completed in 2015, homeowners forked out an MF fee of S$215.60 to S$282.80 a month, he noted.
Today, the MF fee is S$227.15 to S$297.95 a month, while the SF component ranges between S$53.90 to S$70.70. This means homeowners are charged around S$281.05 to S$368.65 a month in maintenance fees – up 30.4 per cent from the initial cost.
The higher fees are in line with new projects. Owners at the 1,862-unit Normanton Park, which received its temporary occupation permit (TOP) this year, pay a management fee of up to S$333.75 a month.
Checks by The Business Times showed that the estimated maintenance fee for some new condos launched this year ranged between S$270 and S$650 a month, excluding the goods and services tax. This amount is subject to change, only being finalised once a project receives its TOP.
Contribution to the sinking fund is bound to grow too as a project ages, to pay for the replacement or enhancement of its facilities, explained Absolut’s Chang.
Making an estimate
For newly launched projects, developers establish an estimated monthly maintenance fee by averaging quotes spanning two years from all services, said Eleana Teo, Knight Frank’s managing director and head of strata management. “The rest of the estimation will be provided by the developer’s consultants, such as the cost of utilities and maintenance of mechanical and electrical equipment in its initial period.”
While the estimate may be slightly lower than the final amount, which requires the Building and Construction Authority’s approval, there should not be a significant deviation, she added.
The newly built Dairy Farm Residences drew flak recently, when residents claimed that their maintenance fee was up to 200 per cent higher than originally estimated when the project was first marketed.
According to media reports, some residents who owned two- to three-bedder units paid more than S$700 a month in fees. This was initially marketed as up to S$350 a month. A petition was filed in October, with more than 600 signatures collected.
The developer, United Engineers, said in November that it has reduced maintenance fees by around 40 per cent, following the uproar from residents.
Ocean IFM’s Lim noted that in recent years, it has not been unusual for the actual fee to be higher than the initial estimate. Costs jumped unexpectedly, especially for manpower, during the pandemic period. And delays affected cost-provision estimates.
“But most developers will not make too much excessive provision as that would make the contribution rate (that is, the fee to be paid) high, which is not as ideal in their sale process,” he pointed out.
https://i.imgur.com/tSH282G.png
Among the new projects launched this year, the 1,008-unit Grand Dunman has an estimated monthly maintenance fee of S$270 for units of 538 square feet (sq ft) and less. The fee goes up to S$540 for units of 2,691 sq ft and up. At the 638-unit Tembusu Grand, the monthly fee is estimated from S$325 a month for a one-bedder to S$585 for a five-bedroom penthouse.
For the 268-unit Sceneca Residence, the estimate ranges from S$293 a month for a one-bedroom unit to S$560 a month for a four-bedroom penthouse.
Larger developments with more units typically charge lower fees compared with projects with similar facilities but fewer owners, as cost is spread more widely, noted Kwok Sai Kuai, head of property management at Edmund Tie. But fees are generally on the rise due to inflationary pressures as well as labour, utility and business cost hikes, he said.
Fees for projects in prime central areas are not necessarily higher than elsewhere just because of the location, Asia Properties added.
What elevates fees at some prime projects are high-cost facilities. “For instance, consider a development with fewer than 100 units yet equipped with high-end facilities like a bowling centre or a movie theatre. The maintenance of such specialised amenities incurs substantial monthly costs.”
For Asia Properties, the average monthly maintenance fee for 10 condos under its management ranges from S$247.58 to S$1,980.
The condos vary in age, from brand new to over 30 years old.
The two with the highest fees are older upscale developments in the Orchard area with fewer units and luxury facilities, the firm said.
https://i.imgur.com/vuAWRab.png
At Absolut Properties, the monthly fee for projects it manages with less than 20 units and with a few facilities ranges between S$400 and S$850, while those with no facilities pay S$400 to S$550.
For larger projects of between 300 and 700 units with full facilities, fees range between S$280 and S$480.
https://www.businesstimes.com.sg/property/condo-maintenance-fees-rise-set-go-higher-costs-climb
Dec 08, 2023
MAINTENANCE fees at private condominiums have crept up over the past decade, and are set to increase further as labour, materials and utilities costs continue to rise with overall inflation.
Private homeowners across the island have seen these fees go up – by up to 30 per cent in some condos – over the last 10 years. At some older luxury condos, owners are now paying up to S$2,000 a month.
Owners pay fees to cover the costs of maintaining and managing the common areas and facilities of the property such as swimming pools, fitness facilities, landscaped greenery and security.
Andy Lim, managing director of facilities management company Ocean IFM, attributed the steady rise in fees to increased manpower and material costs, as well as higher-priced contracts for security, cleaning and landscape services. Maintenance costs are expected to go up further in the coming year with the progressive wage model (PWM) in place, he said.
The model is a wage ladder for certain lower-wage sectors – such as cleaning, security, landscape, lift and escalator, and waste management. For instance, starting from July this year, baseline salaries for up to 3,000 waste-management workers would be bumped up, increasing yearly over six years. Entry-level wages are set to grow 48 per cent in five years, from S$2,210 in 2023 to S$3,260 in 2028.
Hike in tariffs
In October, the National Wages Council also proposed a 5.5 per cent to 7.5 per cent pay hike for workers earning a gross monthly wage of up to S$2,500 – the threshold of the 20th percentile wage level of the workforce.
Higher electricity and water tariffs have also raised costs, said Evelyn Chang, director of Absolut Properties.
Water prices were raised by 30 per cent over two years from 2017, and are set to increase by another 18 per cent in the next two years. And for the fourth quarter of 2023, the electricity tariff will go up by an average of 3.7 per cent from the previous quarter. “We anticipate an increase in the management and sinking funds of about 3 per cent to 5 per cent yearly,” said Asia Properties and Assets Consultancy.
Condo fees include both payments towards a management fund (MF), which caters to day-to-day operation expenses, and a sinking fund (SF) for capital expenditure, such as repairs and new facilities. Actual fees paid by owners depend on their share value in the property, which is tied to unit size. The condo’s size and age, type of facilities and qualitative factors such as the design and layout also make a difference.
Lim at Ocean IFM said that maintenance fees at some properties have risen by at least 25 per cent in the last decade.
When the 1,145-unit The Minton in Hougang was completed in 2015, homeowners forked out an MF fee of S$215.60 to S$282.80 a month, he noted.
Today, the MF fee is S$227.15 to S$297.95 a month, while the SF component ranges between S$53.90 to S$70.70. This means homeowners are charged around S$281.05 to S$368.65 a month in maintenance fees – up 30.4 per cent from the initial cost.
The higher fees are in line with new projects. Owners at the 1,862-unit Normanton Park, which received its temporary occupation permit (TOP) this year, pay a management fee of up to S$333.75 a month.
Checks by The Business Times showed that the estimated maintenance fee for some new condos launched this year ranged between S$270 and S$650 a month, excluding the goods and services tax. This amount is subject to change, only being finalised once a project receives its TOP.
Contribution to the sinking fund is bound to grow too as a project ages, to pay for the replacement or enhancement of its facilities, explained Absolut’s Chang.
Making an estimate
For newly launched projects, developers establish an estimated monthly maintenance fee by averaging quotes spanning two years from all services, said Eleana Teo, Knight Frank’s managing director and head of strata management. “The rest of the estimation will be provided by the developer’s consultants, such as the cost of utilities and maintenance of mechanical and electrical equipment in its initial period.”
While the estimate may be slightly lower than the final amount, which requires the Building and Construction Authority’s approval, there should not be a significant deviation, she added.
The newly built Dairy Farm Residences drew flak recently, when residents claimed that their maintenance fee was up to 200 per cent higher than originally estimated when the project was first marketed.
According to media reports, some residents who owned two- to three-bedder units paid more than S$700 a month in fees. This was initially marketed as up to S$350 a month. A petition was filed in October, with more than 600 signatures collected.
The developer, United Engineers, said in November that it has reduced maintenance fees by around 40 per cent, following the uproar from residents.
Ocean IFM’s Lim noted that in recent years, it has not been unusual for the actual fee to be higher than the initial estimate. Costs jumped unexpectedly, especially for manpower, during the pandemic period. And delays affected cost-provision estimates.
“But most developers will not make too much excessive provision as that would make the contribution rate (that is, the fee to be paid) high, which is not as ideal in their sale process,” he pointed out.
https://i.imgur.com/tSH282G.png
Among the new projects launched this year, the 1,008-unit Grand Dunman has an estimated monthly maintenance fee of S$270 for units of 538 square feet (sq ft) and less. The fee goes up to S$540 for units of 2,691 sq ft and up. At the 638-unit Tembusu Grand, the monthly fee is estimated from S$325 a month for a one-bedder to S$585 for a five-bedroom penthouse.
For the 268-unit Sceneca Residence, the estimate ranges from S$293 a month for a one-bedroom unit to S$560 a month for a four-bedroom penthouse.
Larger developments with more units typically charge lower fees compared with projects with similar facilities but fewer owners, as cost is spread more widely, noted Kwok Sai Kuai, head of property management at Edmund Tie. But fees are generally on the rise due to inflationary pressures as well as labour, utility and business cost hikes, he said.
Fees for projects in prime central areas are not necessarily higher than elsewhere just because of the location, Asia Properties added.
What elevates fees at some prime projects are high-cost facilities. “For instance, consider a development with fewer than 100 units yet equipped with high-end facilities like a bowling centre or a movie theatre. The maintenance of such specialised amenities incurs substantial monthly costs.”
For Asia Properties, the average monthly maintenance fee for 10 condos under its management ranges from S$247.58 to S$1,980.
The condos vary in age, from brand new to over 30 years old.
The two with the highest fees are older upscale developments in the Orchard area with fewer units and luxury facilities, the firm said.
https://i.imgur.com/vuAWRab.png
At Absolut Properties, the monthly fee for projects it manages with less than 20 units and with a few facilities ranges between S$400 and S$850, while those with no facilities pay S$400 to S$550.
For larger projects of between 300 and 700 units with full facilities, fees range between S$280 and S$480.
https://www.businesstimes.com.sg/property/condo-maintenance-fees-rise-set-go-higher-costs-climb