property
Exec condos back after 5 years
Failed Jurong tender won't affect activity and prices, say experts; 4 projects slated for launch this year
By Joyce Teo
A tender for an executive condominium (EC) site drew no takers last Thursday. But that will not affect the activity level - or prices - in the EC market this year.
Four new EC projects yielding about 1,400 units in total will be launched over the next three to six months, said a recent CBRE Research report.
These sites - in Compassvale Bow, Punggol Field, Buangkok and Yishun - were awarded in the first half of the year.
ECs are making a comeback after a hiatus of five years as the Government steps in to ramp up supply for Singaporeans who can afford more than an HDB flat but find private property out of their reach.
The last EC launch was La Casa in Woodlands in 2005.
Last Thursday, an EC site tender in Jurong West Street 42 closed without attracting a single bid, taking the market by surprise.
But there will be another four EC sites available for sale later in the year - in Punggol Drive; at the junction of Elias Road and Pasir Ris Drive 1; Tampines Avenue 8; and Segar Road.
These sites can potentially yield another 2,200 units.
An industry expert said the failed Jurong tender may affect the speed of EC launches but not prices.
'Developers may want to rush out their EC launches because they see that the general property market may be facing more uncertainty,' he said.
But prices will not be affected as developers who bid high for previous sites will not want to lower their final selling prices, he added.
Mr Li Hiaw Ho, executive director of CBRE Research, said: 'Given the tender bid prices for the residential sites in recent months, developers are not likely to reduce prices of the new private homes.
'Assuming the historical 30 per cent price gap between private suburban homes and new ECs remains, median prices of new ECs are likely to stay around $650 per sq ft to $750 psf.'
EC prices have risen with the improving property market, particularly as developers have bid higher at recent EC tenders.
But now that new mass market condos can easily cost nearly $1,000 psf or more, ECs will be attractive to some buyers as they would be priced around
$700 psf, said PropNex chief executive Mohamed Ismail.
A new EC should always be at least 20 per cent to 25 per cent cheaper than a mass market private property, he added.
This is because ECs come with sale restrictions that may cause a buyer to lose out on a market cycle and thus have to wait a few years to cash out profitably, he added.
ECs have initial sale restrictions similar to those for public housing, such as a minimum occupation period of five years.
After five years, they can be sold, but to only Singaporeans and permanent residents. They become private properties after 10 years, when they can also be sold to foreigners.
Mr Ismail said there will always be buyers keen to take the EC route to becoming a private property owner, as first-time EC buyers are entitled to HDB housing grants.
Buyers of new EC units have to meet a gross monthly household income ceiling criterion of $10,000, compared to the $8,000 income ceiling for a new HDB flat.
joyceteo@sph.com.sg
The last EC launch was La Casa (left) in Woodlands in 2005. ECs have initial sale restrictions similar to those for public housing, such as a minimum occupation period of five years. After five years, they can be sold, but to only Singaporeans and permanent residents. They become private properties after 10 years, when they can also be sold to foreigners. -- PHOTO: FAR EAST ORGANIZATION
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