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Sandy Li

Developers are falling over themselves to build swish facilities, but homebuyers will pay in the long run

Major developers are racing to outdo each other in building grandiose clubhouses, but it is not clear who will bear the maintenance costs in the long run.

This exercise in new-generation clubhouses, even in mass residential projects, is part of an aggressive bid to attract homebuyers to new housing projects.

The clubhouses tend to feature world-class facilities that surpass  those in clubhouses built a decade ago in design, quality and range.

While the marketing strategy has helped leading developers boost sales and selling prices, there is growing  concern among property experts that what is good for the developer may not necessarily be the best for the homebuyer in the long term.

Industry observers said large clubhouses only added to the liabilities of homeowners, who would have to pay up when these sophisticated facilities needed repair work.

Faith Tang, executive director of Prudential Surveyors International, predicted that the facilities at some developments would start to show deterioration in the next five to seven years.

'That is the time homeowners will feel the financial pain of keeping up luxury clubhouses,' he said. 'The bigger the facilities, the higher the maintenance costs. Even homeowners who hardly used those facilities will have to share in the cost of maintaining them.'

He said the luxury clubhouse phenomenon began about a decade ago. 'In the first 10 years, homeowners are unlikely to feel the high-cost pinch of maintaining fancy clubhouses.'

It is not unusual these days for big developers to offer five- and six-star clubhouses as a selling point  in new housing projects.

A case in point is Sun Hung Kai Properties' mass residential YoHo Town project in Yuen Long.

When YoHo Town was launched two years ago, some of the apartments were offered for sale for as little as $1 million.

The development boasts a clubhouse of 100,000 sq ft with the kind of state-of-the-art facilities seen in luxury housing projects in other countries. These include outdoor and indoor pools, jacuzzis, a gym,  an aerobics room, a bowling alley, an online games room, a karaoke room, a band room, a multimedia room, a reading room, a billiards area, and sauna and steam rooms.

According to Sino Estates Management, the property management arm of Sino Land, the monthly maintenance fee for a well-equipped heated pool is about $3,000, and $4,000 for a bowling alley, not including the cost of replacing equipment.

Mr Tang said developers would not want to dampen potential buyers' enthusiasm by hinting at the liabilities.

Last week, residents at City One, Sha Tin, were told they would have to  pay up to 40 per cent more in management fees to cover a multimillion-dollar maintenance project for the 52 residential towers and recreational facilities. The project will be completed in 2007.

Eddie Hui Chi-man, professor of building and real estate at Polytechnic University, said the need to replace, rather than simply repair, damaged facilities at large clubhouses was a huge task for the management of these complexes.

In the absence of a 'sinking fund' to cover repair and maintenance costs, all families in a large housing estate had to pay  towards these costs, which were constantly rising, he said.

The average management fee of $1 per sq ft to $2 per sq ft charged by estate management companies barely covered the daily operational costs of maintaining services for residents and running clubhouses, he said.

Chau Kwong-wing of the University of Hong Kong's  department of real estate and construction said many homebuyers were not fully aware of their liabilities in building maintenance.

'Buyers should know that these facilities are not free,' Professor Chau said.

Sunny Yeung,  director and general manager of  Sino Estates Management,  said the company had a reserve fund for buildings that required improvement or replacement work.

He  said  heated pools and lighting features were high energy consumers.

The estate management companies of big developers charge a one-off, six to nine months' management fee when homebuyers move into a new project. Mr Yeung said this helped to  build up a cash reserve, which was deposited in a bank to earn interest income if no emergency maintenance work was required.

Suen Kwok-lam,  president of the Hong Kong Association of Property Management Companies,  said it was unfair to say clubhouses  were a big liability  in the long run. 'In the bigger estates, the cost per household is really nominal. But you get first-rate club services.'

Hong Yip Service Company,  SHKP's property management arm, said its annual budget included the maintenance costs of all facilities. This budget had to be approved by the owners' committee.

The price of pleasure

(Includes only basic monthly maintenance expenses)

Heated pool - $3,000

Bowling alley - $4,000

Spa - $2,000

Gym - $800

Source: Sino Estates Management



Case of the costly clubhouses