Mandarin Gardens: What’s next for residents after failed collective sale bid?

The collective sale hopes of owners in the 1,006-unit Mandarin Gardens ended after the last attempt in 2023 failed to secure the 80% threshold needed for its launch at a reserve price of $2.88 billion. The collective sale garnered support from only 42% of the owners. The collective sales committee (CSC), elected at the end of 2022, had worked hard to drum up support for the collective sale. However, the property cooling measures in April 2023 dampened sentiment among owners. Foreigners were hit particularly hard as the additional buyer’s stamp duty doubled to 60%. Support for the collective sale was highest among owners of the smaller units and lowest among owners of the larger units on high floors with sea views. That is a reflection of the greatest obstacle to a collective sale today — replacement cost, says Thomas Ong, one of the residents of Mandarin Gardens and a member of the CSC. Read also: Three-bedder at Pebble Bay sold for $2.2 mil profit Advertisement Advertisement “By August last year, it was clear to the CSC that we would not be successful in getting 80% of the owners of Mandarin Gardens to support the collective sale,” adds Ong. According to Ong, who is also a member of Mandarin Gardens’ management council, it was clear that the thoughts of residents had already “pivoted towards renewal and rejuvenation plans” at the annual general meeting (AGM) last September. There was overwhelming support for improvement plans at the AGM. These included replacing the water tanks and waterproofing works required by the authorities. It culminated in residents approving $5 million in upgrading works. According to Ong, the MCST had difficulty gaining support for such big-ticket expenses before the failed collective sale. Mandarin Gardens has 1,006 condo units spanning 17 blocks ranging from nine to 23 storeys on a 1.08 million sq ft site. The project also includes 11 strata commercial units. Facilities include three swimming pools, barbeque pits, a fitness corner, a gym, a children’s playground, four tennis courts, a mini-mart, a childcare centre and a restaurant. The 99-year leasehold condo was built in 1986 and has 61 remaining years on its lease. Mandarin Gardens is already 38 years old. The property is managed by Ong & Associates.

Proposed upgrades, renewal

“As a condo development ages, scheduling regular inspections and condo maintenance becomes more critical,” says Kwok Sai Kuai, head of property management at Edmund Tie. “Doing this helps to nip any serious issues in the bud and prevent further damage or costly repairs that may follow. It is also critical for the safety and comfort of residents.” Read also: Savills Property Management: How the business has evolved over the past decade Advertisement Advertisement According to Patrick Wong, a Mandarin Gardens resident and management council member, condo maintenance has been ongoing. These include the replacement of emergency generators and circuit breakers, general repairs and repainting works. Over the past few months, Mandarin Gardens’ management council has collected feedback and suggestions on proposed estate improvements and facility upgrades. These will be tabled for consideration at the upcoming AGM next month. Some of the most popular proposals include upgrading the function room, adding new bicycle racks, installing solar panels on rooftops, upgrading the lift interiors, adding an outdoor gym for seniors and bringing in a new restaurant operator. Although the wish list is long, any new facilities or improvements that receive residents’ approval will be progressively implemented. On Aug 20, the management council awarded its former restaurant operator, ThaiPan, the tender to run the condo’s sole restaurant unit. The restaurant had been run by another operator, Folk & Spoon, for close to three years. ThaiPan is expected to start operations on Oct 10. The management council is also working with Charge+, Singapore’s largest EV (electric vehicle) charging network, to retrofit 26 car park spaces with EV chargers, including two fast chargers. Charge+ would offer the charging stations as a payable service, reducing the capital outlay condos like Mandarin Gardens would otherwise need to fork out. Davey Khoo, a management council member, says the EV charging stations will be operational by October, pending final approval from the Land Transport Authority.

Rejuvenation of older condos

“Such upgrading initiatives are a good way for condos to refresh their appeal to existing residents and potential new homeowners,” says Winnie Wong, managing director of property management at Savills Singapore. Read also: Owners of Mandarin Gardens eye new collective sale at $2.88 bil Advertisement Advertisement “Keeping ahead of property maintenance and upgrading initiatives help to sustain the building’s liveable condition, and then people don’t have to feel compelled to move out or upgrade to newer developments.” Savills’ Wong points to Horizon Towers as another condo that has opted for renewal of the development following a failed collective sale attempt last year. The residents gathered at a recent AGM to propose a master plan to rejuvenate their condo and allocated about $5 million to improve the facilities and refresh the development. Another example is Honolulu Tower. Although it did not launch a collective sale attempt, the 60-unit development needed a refresh after over 30 years. According to Savills’ Wong, the owners approved several upgrades, including a new gate, drop-off and lift lobby, clubhouse and function rooms. In each of these cases, the rejuvenation plans were successful due to an active and involved management council that laid out a broad rejuvenation plan for the development, says Savills’ Wong. What’s more important is the widespread support from residents to approve the expenses, she adds.

Rising maintenance costs

Maintenance costs have increased in tandem with higher development and building costs of new condos in recent years. “Since the end of the Covid pandemic, the costs of maintaining residential developments and estates have spiked due to higher manpower costs,” says Wong. She points to the government’s rollout of the Progressive Wage Model (PWM), which has helped to uplift the wages of lower-wage workers, including cleaners, security personnel, landscape maintenance employees and waste management workers. In most cases, the cost of higher wages has been passed on to consumers. Before the implementation of the PWM, the average monthly wage of a condo security guard was between $2,000 and $3,000. After the PWM, monthly wages are between $4,500 and $4,800. In many cases, condo councils have responded by reducing the number of security guards they employ or turning to technology and mobile applications. Some have installed the Visitor Management System (VMS), which can be deployed at a monthly fee of about $2,000. “Generally, a VMS is an economical alternative for most private residential developments and it significantly reduces the overall manpower workload of the remaining security guards,” says Wong. According to Edmund Tie’s Kwok, many older developments incorporate smart energy solutions to control lights, aircon usage and other mechanical equipment like pumps. Some will invest in intelligent security solutions and mechanise cleaning operations to optimise manpower. Savills’ Wong notes that monthly utility costs have also increased over the past three years. Most developments are responding quickly by installing new technology such as light sensors and replacing older fluorescent bulbs with energy-efficient LEDs.

Reluctance to raise service fees

With elevated maintenance costs and inflationary cost pressures, condos will undoubtedly have to increase service charges soon. “Based on our experience, we see that many condos have kept their service fees relatively stable for the last two to three years,” says Wong. Mandarin Gardens is a good example. According to Mandarin Gardens’ council member Ong, owners’ monthly service fees for the maintenance and sinking funds at Mandarin Gardens have remained largely unchanged for many years. “The condo is sitting on a healthy amount in its sinking fund for non-recurring and larger expenditures,” he says. The sinking fund is typically used for larger, infrequent cash outlays required for major repairs or replacements every few years, says Edmund Tie’s Kwok. The management fund covers regular and ongoing expenses, such as security, lift repairs, and communal facility maintenance. Since management fund expenses are unavoidable for the safety and comfort of residents, Kwok says a common strategy employed by most management councils is to minimise the use of the sinking fund whenever possible. “For older properties, this may involve efforts to extend the lifecycle of major periodic works — such as roof waterproofing, re-roofing, swimming pool refurbishment or re-tiling — without compromising residents’ safety,” Kwok lists. “By carefully managing these major expenses, we can ensure that the sinking fund remains reserved for when it is truly needed, thereby reducing the financial burden on residents.” Some management councils are aware that costs are creeping up but are reluctant to put forward a resolution to raise residents’ service fees, observes Savills’ Wong. Consequently, these managing councils will demand that their managing agents find ways to reduce costs, she adds. Savills’ Wong suggests progressive increments in a condo’s service fees: “A gradual increment of $2 per share annually will go a long way towards helping residents live in a fresh and liveable estate.”

Building consensus

Council member Wong says Mandarin Gardens’ owners are working towards a consensus on a broad, long-term rejuvenation plan to ensure their sense of community persists. A consequence of the collective sale attempt was that the price expectations of some owners keen to sell their units were raised, he adds. These owners benchmarked their asking price to the valuation of their unit based on the reserve price during the collective sale, which is a premium to the market price. Since the start of the year, 12 units have changed hands based on caveats lodged as of Aug 20. Prices ranged from $1 million ($1,366 psf) for a 732 sq ft, one-bedroom unit on the eighth floor, which changed hands in February, to $2.85 million ($1,401 psf) for a 2,034 sq ft, three-bedroom unit on the 18th floor in April. The opening of the stations in the fourth phase of the Thomson-East Coast Line (TEL) in June, consisting of stations from Tanjong Rhu to Bayshore, has also spurred some owners to capitalise on the renewed buying interest in the area, says Mandarin Gardens’ Wong. Mandarin Gardens sits between two MRT stations on the TEL: Marine Terrace and Siglap. Check out the latest listings for Mandarin Gardens properties