ST : 2 new exec condo sites launched

Jan 15, 2010

2 new exec condo sites launched

Sengkang, Yishun plots the first to be launched since La Casa in 2005

By Jessica Cheam

EXECUTIVE condominiums (ECs) are making a comeback after a hiatus of almost five years, as the Government ramps up the supply of flats for middle-income buyers.

The HDB is launching two EC housing sites today, in Sengkang and Yishun, that will yield about 900 new homes in the next few years. ECs boast many of the facilities of private estates but are subject to such HDB rules as income ceiling and minimum occupation period.

Analysts told The Straits Times they expect the sites to attract a lot of interest from developers, given the demand for mass market flats that started heating up in the second quarter last year. Suburban home prices rose by an estimated 11.2 per cent last year, and in the process left a group of 'sandwich-class' buyers who have been priced out of the market and are looking for alternatives, say analysts.

The HDB move marks a turnaround for a type of housing that lost popularity in recent years due to the affordable prices of mass market condos.

PropNex chief executive Mohamed Ismail said even though it will be a while before the ECs are launched for sale, buyers are expected to bite when the time comes. 'In the past, there was no demand for ECs because the private mass market homes were largely affordable, but with tight supply and high demand, HDB home buyers will welcome this fresh supply,' he said.

ECs were introduced in 1996 to provide for middle-income buyers who wanted private property living but were unable to afford the prices. The last EC launched was La Casa in Woodlands in 2005, which was completed in early 2008. A Punggol EC site was launched in September 2008 but had no takers.

ECs fully convert to private housing after 10 years. First-time buyers with monthly incomes of up to $10,000 can apply for a $30,000 housing grant.

Prices of ECs have been on the rise in tandem with the mass market boom, said analysts yesterday.

A CB Richard Ellis report last November found the median resale prices of ECs had increased 63 per cent in recent years - from $319 per sq ft (psf) at the bottom of the market in the third quarter of 2006 to $519 psf in October last year.

They have inched even higher in the past three months, with homes in good locations hitting around $600 to 700 psf.

A 1,464 sq ft home at Bishan Loft, for example, sold for $1.12 million or $765 psf in December, according to data from the Urban Redevelopment Authority

ERA Asia-Pacific associate director Eugene Lim pointed out that entry-level mass market condos are now priced north of $800,000 for a three-bedder.

'ECs are expected to be priced below this and are attractive due to the HDB's grant, so it will offer home buyers an alternative,' he said.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said he expects about five to 10 bids for each of the two sites.

He also estimates that the bidding prices will range from $120 million to $141 million for the Sengkang site and $72 million to $96 million for the Yishun plot.

Mr Mak cautioned that despite the positive sentiment in the mass market, it will be difficult to predict responses from buyers when the homes are finally launched - likely up to a year's time.

'We also don't know the interest rates situation then, so it's too early to accurately predict demand,' he said.

Home buyer Du Zuo Ling, 27, said the ECs would top her list of homes to consider when they are launched as HDB resale flats are getting more expensive.

'With ECs, the income ceiling is higher, and we can get housing grants. It will be good to have more of such choices,' said Ms Du.