Executive condos return to the spotlight

Executive condos (EC), a hybrid of private and public housing, are now returning to the spotlight.

On 26 May, the government launched the 11th EC site since 2010, a plot in Punggol that can house around 720 homes.

Meanwhile, Chip Eng Seng and NTUC Choice Homes recorded rapid first-day sales for their Belysa project in the Pasir Ris / Elias Road area. Of the 315 units, 147, comprising three- and four-bedroom units, have been sold at around S$670 psf each.

“There is a big market for EC units priced between S$600,000 and S$700,000,” said Joseph Tan, CB Richard Ellis (CBRE) Executive Director (Residential), adding that the price gap between 99-year leasehold suburban private condos and EC projects has widened once again.

Mr. Tan noted that the typical price gap was around 25 to 30 percent when ECs were launched in 1996. This gap narrowed over the years due to weak suburban condo prices, which resulted in dwindling demand for ECs.

However, the sharp recovery of 99-year mass market condo prices has reinforced the demand for ECs.

“Today, 99-year mass market condos which are not near an MRT station could be priced around S$900 to S$950 psf on average, while an EC project in a similar location would be around S$650 to S$700 psf,” Mr. Tan said.

Most analysts expect the monthly household income ceiling for ECs to be increased from S$10,000 to S$12,000 or above, assuming the government proceeds to raise the ceiling for those purchasing new Build-To-Order (BTO) flats from the HDB from S$8,000 to S$10,000, pending a review.

“That will create more realistically-priced alternatives for the sandwich class and siphon off some demand from 99-year mass-market private condos,” said Mr Tan.

Many real estate analysts anticipate top bids for the recent EC site at Punggol Way / Punggol Field to be within the S$300 psf to S$350 psf ppr range and the average selling price to be approximately S$700 psf to S$750 psf.

Ong Teck Hui, Credo Real Estate Executive Director, noted that some EC developers may be more careful about bidding for the site if they are concerned that the income ceiling for EC buyers will be unchanged while that for HDB BTO flats will increase. Consequently, more people will qualify for HDB flats and this will lower demand for ECs.

Source : PropertyGuru – 26 May 2011