Why Most Condos Are Underfunded — And the Hidden Cost You’ll Eventually Pay

Let’s start with something simple.

Think about how we manage the valuable things in our lives.

A car gets regular servicing, oil changes, tyre replacements—because we know neglect leads to breakdown.

Appliances come with lifespans, and responsible owners set aside money for replacement.

Even our health requires long-term care—we exercise, eat well and plan ahead.

But when it comes to condominiums—assets worth millions—the same logic often disappears.

A typical 100-unit development can easily exceed $100 million in collective value. Larger estates approach a billion dollars. These are not small assets. They are long-term, shared investments.

Yet in condos—where the stakes are exponentially higher—basic maintenance logic often collapses. Step into most Annual General Meetings, and the conversation sounds very different.

You may hear debates about a $5 increase in monthly fees—but not a word about the $2 million lift replacement coming in eight years.

The focus is often on keeping monthly contributions low—while the long-term financial health of the development takes a back seat.

The Real Problem: Underfunding Is Built Into the System

Most special levies are not surprises.

They are the result of years of under planning.

This happens because of a combination of structural and behavioural factors.

Why It Happens: Three Common Trap

1. The “Out of Sight, Out of Mind” Trap

Day-to-day expenses—security, cleaning, landscaping—are visible and immediate.

But major capital components quietly age in the background:

• Lifts nearing the end of their 20–25 year lifecycle
• Water pumps and fire safety systems operating beyond optimal lifespan
• Roofs and car park waterproofing deteriorating out of sight

These are predictable costs, not unexpected ones.

When they are not planned for early, they eventually require large capital outlays. Without sufficient sinking funds, developments are forced into sudden financial shortfalls.

Even when the physical systems are ageing, another force works quietly in the background.

2.Short-Term Ownership Mindset

Singapore’s framework allows sinking fund contributions to start relatively low.

While this reduces immediate costs, it creates long-term risk.

At the same time, many owners do not view themselves as long-term stakeholders. With property values rising, some plan to exit when prices are favourable.

This creates a misalignment:

• Owners prefer lower fees today
• But maintenance costs are pushed into the future

Over time, this leads to systematic underfunding, where future owners bear the consequences through:

• Special levies
• Deferred maintenance
• Declining property standards 

3. Gaps in Long-Term Planning

Managing agents play an advisory role—but long-term planning is not always consistently implemented.

Part of the issue lies in industry structure:

• Managing agents are typically appointed on short-term contracts
• There is no universal requirement for formal lifecycle or reserve fund studies

As a result, many developments rely on year-to-year budgeting, instead of structured long-term forecasting.

Effective asset management requires:

• Multi-year planning for major replacements
• Continuity of data
• Alignment between projected costs and sinking fund contributions

Without this, financial planning becomes reactive instead of proactive.

The Bigger Issue: A System That Encourages Short-Term Thinking

These challenges are not caused by a single party.

They are the result of:

• Costs that are predictable but not visible
• Incentives that favour short-term decisions
• A lack of mandatory long-term planning frameworks

Maintenance costs do not appear suddenly—they are simply deferred when ignored.

How to Build Financially Healthy Condos

Good financial management is not about minimising costs.

It is about managing them early and sustainably.

1.Plan 5–15 Years Ahead

Financial planning should go beyond the next financial year.

A proper approach includes mapping out major expenditures over a 5–15 year horizon:

• Mandatory work (e.g. repainting works)
• Replacement of wear-and-tear components (e.g. waterproofing, security systems)
• Major mechanical and electrical replacements (e.g. lifts)

This allows developments to build reserves gradually, instead of facing sudden financial strain.

Globally, leading jurisdictions are shifting toward mandatory reserve studies and lifecycle planning. Singapore will eventually need to follow.

2.Build in a Safety Buffer

Every well-managed budget needs contingency.

A small allocation each year can absorb:

• Unexpected repairs
• Utility cost increases
• Equipment failures

Without this buffer, even minor disruptions can escalate into urgent financial decisions or special levies.

3. Communicate Clearly with Owners

Financial planning only works when owners understand it.

Clear, transparent communication should include:

• Visual projections of future costs
• Historical spending trends
• Simple, plain-English explanations

When owners see how small contributions today prevent large costs tomorrow, support becomes easier to achieve.

Raising the Standard of Strata Management

If Singapore is to remain a world-class place to live, strata management must continue to evolve.

This requires:

• Stronger guidelines on sinking fund adequacy
• Higher professional standards across managing agents
• A shift in mindset—from cost minimisation to asset preservation

A condominium does not run into financial difficulty overnight.

It happens gradually—when planning focuses only on today and neglects tomorrow.

A Smarter Way Forward

At Wisely 98 Pte Ltd, we believe in proactive, professional strata management that protects long-term asset value.

Our expertise includes:

• Strata law and governance
• Lifecycle planning
• Sinking fund forecasting
• Preventive maintenance strategies

Because condo owners deserve predictability—not financial surprises.

Take Action Before It Becomes a Problem

Not sure if your condo is financially prepared for the next 10 years?

Speak to our team at Wisely 98 to review your estate’s financial plan and identify potential funding gaps—before they turn into special levies.

Our team has supported developments through lift replacements, façade works and multi‑year reserve planning.

A well-funded development is not just well-maintained.It is a property that sustains its value over time.

Don’t wait for the next AGM to ask: “Where did the money go?”