BT : First-timers to get 95% of latest EC projects

Business Times - 15 Jan 2010

First-timers to get 95% of latest EC projects

Sengkang plot seen going for $190-300 psf ppr; Yishun, $150-210 psf ppr

By KALPANA RASHIWALA

(SINGAPORE) Two executive condominium (EC) sites, one in Sengkang and the other in Yishun, will come with a twist when they are launched today. The winning tenderers will have to set aside 95 per cent of units in the initial month of sale for first-time home buyers. That is, those that have yet to receive a housing subsidy.

Market watchers say that the strategy is aimed at meeting strong demand for HDB flats from this segment of late.

ECs are a hybrid of public and private housing. They are strata-titled apartments with facilities comparable to private condos. New ECs are sold with initial eligibility, ownership and resale restrictions similar to public housing; but these are completely removed after 10 years.

Knight Frank managing director (residential services) Peter Ow says that setting aside 95 per cent of a new EC project for first-timers will help ease their difficulty in purchasing a home.

'Looking at how recent Built-To-Order HDB flats are oversubscribed and an expected continued recovery in the private residential market, ECs - a hybrid fulfilling the difference in these two property types - are expected to be met with overwhelming buying interest,' he added.

'Ironically, though, first-time buyers may have less purchasing power . .. and would thus have to be prudent and ensure they will be able to continually finance their purchase, even if they are given the privilege to buy,' he added.

Of the two 99-year leasehold plots on offer, the Sengkang plot, near Buangkok MRT Station, will be more highly sought after and hence fetch a higher unit land price, say property consultants. It can be developed into 520 apartments and is just one MRT stop away from Compass Point mall.

The Yishun plot, which can yield about 385 units, is not within walking distance of an MRT station, although it could make for a conducive living environment. It is close to Yishun Park, Orchid Country Club and Lower Seletar Reservoir. The Yishun plot is next to a completed EC project, Lilydale.

Property consultants that BT polled predict that land bids for the more popular Sengkang plot would range from about $190 to $300 per square foot per plot ratio (psf ppr), with target average selling prices of $550-600 psf.

Colliers International director Tay Huey Ying says that three EC projects in the north-east region - Park Green, The Rivervale and The Florida - sold at average prices of $525-546 psf - in Q4 2009.

For the Yishun plot, consultants expect bids of around $150-210 psf ppr with average selling prices of $500-580 psf. Units in Lilydale next door transacted at $494 psf on average last quarter, notes Ms Tay.

Real estate lecturer Nicholas Mak predicts about four to nine bids for the Yishun plot and five to 10 offers for the Sengkang land parcel. BT understands that some developers may be put off from bidding for the EC sites due to more admin work involved, including checking buyers' eligibility criteria.

The last EC project was Far East Organization's La Casa in Woodlands, which was released at an average price of about $380 psf in May 2005 and completed in 2008.

Last year's sharp recovery in 99-year leasehold mass-market private condo prices has revived the need for ECs, say analysts. 'If the price gap between the new EC projects and new 99-year private condos in the same location is attractive enough, homebuyer demand for ECs will surely return,' says CB Richard Ellis executive director Li Hiaw Ho.

Sim Lian Group executive director Diana Kuik says the $10,000 monthly household income cap for new EC buyers will serve to rein in land bids. An overly aggressive successful bidder may carve out a higher proportion of small units to try and achieve higher psf selling prices, she reckons.

While some developers may not be be pleased with the stipulation favouring first-time buyers, Knight Frank's Mr Ow says: 'We don't see a great impact on marketability of the EC projects as recent BTO projects have seen overwhelming response.'

ECs were minted in 1995 to cater to the 'sandwich class' who aspire to own private condos but find themselves priced out. The $10,000 income ceiling for new EC buyers is above the $8,000 for those seeking to buy new public housing flats from HDB.