Rising EC prices due to increase in quality and demand, say analysts

Analysts have attributed rising Executive Condominium (EC) prices to strong demand and rising quality of EC projects.

Prices for ECs have risen by 10 to 20 per cent in the last two years, since the government re-introduced them to increase the supply of flats for middle-income home buyers.

“We all recognise that Singaporeans are getting affluent and especially the young, they read a lot and they see a lot on the internet and therefore their expectations naturally grow,” said CEO of Amara Holdings Limited Albert Teo.

Amara Holdings Limited, Kay Lim Holdings and SingXpress Land recently jointly developed CityLife@Tampines, the first EC project in Singapore to feature a home concierge service and a 100-metre infinity pool.

Indicative pricing for CityLife@Tampines ranges between S$780 and S$850 per square foot.

ECs are typically priced 20 to 30 per cent cheaper than private homes in the mass market segment.

However analysts say EC prices appreciate once resale restrictions are lifted after 5 years.

“When the EC reaches its 5th year, the price gap could narrow to around 15 to 20 per cent… When the EC reaches its 10th year, whereby it is open in the market and the unit can be sold to anyone including foreigners, the price gap could narrow further to 10 to 15 per cent,” said Alice Tan, senior manager of Consultancy and Research at Knight Frank.

Colin Tan, director of Research and Consultancy at Chesterton Suntec International noted that lower-end private homes gravitated towards smaller units and shoebox apartments. EC units on the other hand have grown bigger.

“Eventually when the market corrects… you may find that the preference for ECs, with its bigger sizes, may actually appeal better,” he said.

Market watchers say over 3,300 EC units have been launched in the first 10 months of 2012.

Competition in the segment is also expected to remain stiff.

“From the nine plots of land sold this year, you can expect more EC projects to be rolled out in the coming months. Right now if we average out the number of bidders per site, it is about seven. That’s pretty competitive and the good sites are seeing like 10 bidders,” said Eugene Lim, key executive officer at ERA.

Analysts have also said that EC prices could continue to increase as developers launch more attractive projects.

However they added that developers will also be mindful that ECs cater to households earning up to S$12,000 a month.

Source : Channel NewsAsia – 30 Nov 2012

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