Another housing problem: sky-high management fees
TVB artist Samantha Ko, who bought a two-bedroom unit at Peninsula East, will face a 'higher than expected' monthly fee of HK$4.10 per square foot
Spare a thought for Hong Kong homeowners. True, they are usually the lucky ones in the wake of rising property prices. Yet they are also the unlucky ones because the apartments they own are getting smaller.
Worst of all, they have to pay hefty management fees on top of their monthly mortgages.
Consider the case of the owners of apartments in the Peninsula East development in Yau Tong, overlooking Lei Yue Mun, the famous channel separating Kowloon and Hong Kong Island. Many of them just count their blessings for having been able to buy an apartment for around HK$10,000 (US$1,280) per square foot two years ago; they are now worth at least HK$15,000 per square foot (nearly HK$161,500 per square meter).
But after they move in, they will have to pay 20% more for a management fee, as indicated by the developer Wheelock Properties on Tuesday as the project nears completion. Two years ago, buyers were told that their management fees would be between HK$3.30 and $3.50 per square foot, but now they will probably need to pay $4.10 because of higher inflation and staff costs.
To put in perspective, the owner of a 480-square-foot (44.5-square-meter) unit, the smallest in the estate, will need to pay a monthly management fee of HK$1,967.
TVB artist Samantha Ko Hoi-ling, who bought a two-bedroom unit of 525 square feet, said she was excited about moving in but complained that the management fee was higher than she had expected.
Mind you, management fees, like other utilities and children’s items such as school textbooks, have always outstripped the rate of inflation. Think of it as the second bite of a cherry on top of the fat margin Hong Kong property developers enjoy.
And among Hong Kong estates, Peninsula East will not be charging the highest management fee. Actually it is typical, because very few new homes will charge less than HK$4 per square foot.
For example, across from Peninsula East is One Prestige, on which developer Henderson Land will charge a whopping HK$5.50 per square foot. Even the owner of the smallest unit, measuring just 128 square feet and qualified as a “nano flat”, will have to pay $700 a month. That amount may seem tiny, but it is probably equivalent to the rate of the three-bedroom units in its old neighboring buildings.
The sky-high management fee at Peninsula East made the front page of the South China Morning Post as Hong Kong saw skyrocketing home prices and a rising stock market.
The paper tried to explain why residential management fees will keep rising, quoting JLL, which managed 400 residential, office and industrial projects in Hong Kong, as saying that modern facilities such as indoor and outdoor facilities, gyms, reading and dining rooms, and even cleaning and laundry services require more staff, meaning more costs.
William Lai, the head of property management at JLL, said: “I’m not sure if Hong Kong management fees are the world’s highest, but they are definitely the most expensive in Asia.”
That is why Hong Kong landlords are enjoying the ride. Well, if you can’t beat them, buy their shares as a hedge.