Condo fees are on the rise and will continue to increase
The maintenance fees for private condominiums are increasing as the cost of labour, materials, and utilities continue to rise.
Over the past 10 years, homeowners on the island have seen their fees rise – in some cases by as much as 30 percent. Some older luxury condos now charge up to S$2,000 per month.
The fees are paid by the owners to cover the cost of maintaining the common areas of the property, such as the swimming pool, fitness center, landscaping, greenery, and security.
Market analysts attributed the steadily rising fees to higher manpower and materials costs as well as more expensive contracts for cleaning, security and landscaping services. The PWM is expected to increase maintenance costs in the next year.
This model is a ladder of wages for lower-wage industries, such as cleaning and security, landscaping, lifts and escalators, and waste management. Starting in July of this year, the salaries of up to 3,000 workers involved in waste management will be increased. The increase is expected to occur every six months.
The entry-level wage is expected to increase by 48 percent in five years from S$2,210 to S$3,260.
The National Wages Council proposed in October a pay increase of 5.5 to 7.5 percent for employees earning up to S$2,500 gross per month – the threshold level of the 20th percentile of wages.
The cost of electricity and water has also increased.
The water prices have increased by 30% in two years, and will increase another 18% over the next two. The average electricity tariff for the fourth quarter in 2023 will increase by 3.7 percent from the previous quarter.
Condo fees cover both a management fund, which covers day-today operating expenses, as well as a sinking funds (SF), for capital expenditures, such repairs and new facilities.
The actual fees that owners pay depend on the share value of their property which is linked to the unit size. Size and age of the condo, as well as its type of amenities and qualitative features such a design and layout can also affect fees.
The Minton, a 1,145-unit development in Hougang completed in 2015 cost homeowners between S$215.60 and S$282.80 per month in MF fees.
The MF fee ranges from S$227.15 – S$297.95 per month. Meanwhile, the SF component is between S$53.90 – S$70.70. The monthly maintenance fee for homeowners is between S$281.05 and S$368.65, which is a 30.4 percent increase from the original cost.
Owners of the 1,862-unit Normanton Park who received their temporary occupation permit this year pay a monthly management fee up to S$333.75.
The Business Times found that the estimated monthly maintenance fee for new condos launched in this year ranged from S$270 to S$650, excluding goods and services tax. This amount can change and is only finalised after a project has received its TOP.
As a project gets older, the contribution to the sinking funds will also increase to pay for its replacement or improvement.
The estimate should not differ significantly from the final cost, as long as the Building and Construction Authority approves it.
Residents of the newly constructed Dairy Farm Residences have recently complained that their monthly maintenance fees were up to 200 percent higher than initially estimated when the project first went on sale.
Media reports claim that some residents of two- and three-bedroom units payed more than S$700 per month in fees. The initial marketing stated that the monthly fee could be as low as S$350. In October, a petition with over 600 signatures was filed.
United Engineers announced in November that they had reduced their maintenance fees by 40 percent, after residents complained.
The actual cost of the service is often higher than what was initially estimated. During the pandemic, costs soared unexpectedly, particularly for manpower. And delays affected cost-provision estimates.
The Grand Dunman, a 1,008 unit project launched in this year, has a monthly maintenance fee estimated at S$270 per unit of less than 538 square feet. The monthly fee increases to S$540 if the unit is larger than 2,691 square feet. The monthly fee at the Tembusu grand, which has 638 units, ranges from S$325 for a 1-bedder up to S$585 per month for a 5-bedroom penthouse.
The estimated monthly rent for the 268 units of Sceneca Residence ranges between S$293 for a 1-bedroom unit and S$560 for a 4-bedroom penthouse.
The cost of larger developments with many units is usually spread out more evenly than smaller projects with fewer owners. Fees are on the rise because of inflationary pressures, as well as increases in labour costs, business costs and utility costs.
The location of a project does not mean that the fees are higher.
High-cost amenities are what drive up fees in some of the most prestigious projects. Consider a project with less than 100 units, but with high-end amenities like a bowling alley or movie theatre. Maintenance of these specialized amenities can be expensive.