Management fees for new residential blocks rising 5-10pc annually
The owner of One Prestige’s 163 sq ft flat, which sold for HK$3.87 million, can expect to pay HK$900 monthly fee
Hongkongers are watching their living spaces shrink as home prices rise. But their property management costs are also soaring.
William Lai, head of property management at JLL which manages a portfolio of 400 residential, office and industrial projects, says management fees for residential block developments with smaller numbers of units, are rising especially fast.
A good example is One Prestige in North Point, which includes the 163 square feet (sq ft) unit considered the smallest ever flat sold on Hong Kong Island.
The management fees at Henderson Land Development’s 128-unit development, which offers units up to 234 sq ft, will start at HK$5.5 per sq ft.
That’s around 130 per cent higher than at the 22-year-old, 650-unit luxury development, The Robinson Place on Robinson Road in Mid-Levels West, which start at around HK$2.4 per sq ft.
The buyer of One Prestige’s 163 sq ft flat – which sold for HK$3.87 million when the project opened for sale on September 20 – can expect to pay a monthly management fee of HK$900, while a 164 sq ft unit with a 540 sq ft balcony on the fifth floor, will cost nearly HK$1,250 a month.
Henderson Land claims its management focus is to offer value-added services, including at its recreation club, which is open 24 hours.
The development will have a 1,442 sq ft residents’ recreation club on its second floor comprises a small gym while there is a 922 sq ft podium garden on the floor above. It also offers catering and cleaning services to individual owners – but those aren’t included in the fee.
At the company’s other new project offering smaller flats, the 250-unit Seven Victory Avenue in Ho Man Tin, charges are similar, starting at HK$4.6 per sq ft.
JLL’s Lai says management fees have been growing 5 to 10 per cent annually since the introduction of the minimum wage in 2011, compared with 3-5 five per cent previously.
And as well as rising staff costs, rising standards of customer services have been pushing up fees.
After Hong Kong’s new minimum wage took effect, he explained all management staff – from security guards to desk receptionists – in new housing estates have to operate in three shifts of 8 hours each, rather than two shifts, allowing companies to avoid paying extra allowances on an hourly basis.
Previously it was common practise for watchmen to work 10-hour shifts in some older developments. Total monthly expenses for three shifts of security guards now average around HK$30,000, or HK$10,000 each, about 50 per cent more than previously.
In many new developments, gyms and swimming pools, even private theatres, are commonplace, often manned 24 hours a day. And every private swimming pool now requires at least two lifeguards, who can cost a development as much as HK$60,000 per month.
Utility expenses for a 5,000 sq ft club can also cost HK$10,000 a month, with air conditioning the main expense.
“We currently employ 4,000 on-site employees, but we still have 200 job vacancies to fill,” Lai said, adding there is actually a shortage of qualified staff in Hong Kong, which again is pushing up salaries, and management costs.
But compared with other international cities, he believes Hong Kong’s fees could be lower as there are fewer large-scale housing developments here than in London or New York, for instance, where heating costs are often added.