Are ECs over hyped in 2019?

 With over 2,400 Executive Condominiums (EC) units expected to be launched in 2019/2020, interest in this unique property class has never been higher. After numerous proven cases of profitable purchases from past EC developments, many middle-class HDB home owners see an EC as the desired option in their property journey.

ECs are meant to serve the “sandwiched” class, who’s households monthly incomes of fall between $12,000-14,000 (too rich to buy BTO, but still find full private condo as a pricey option).

Definitely seen as a rarity in the property market, only 5 developer units EC remain unsold as of end 2018. The next EC launch is expected to happen in late 2019 in Sumang Walk. This low supply has bolstered confidence in developers to increase prices of previously unsold units. This has already been launched as Piermont Grand EC.

In Northwave EC, initial units were sold at launch in Jul 2016 for $779psf (a 2 bedroom 753sqft #14 floor unit was recorded as $587,000 - deal highlighted below)

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2 years later in 2018, developers sold another unit just 2 floors down at a significantly higher price of $645,000. These two units would have the same exact layout, same exact views. But the developers were able to make a $58k profit just by waiting 2 years.

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That is a close to 10% increase for the buyers who came in 2018.

Do note that every single one of the 2019-2020 EC launches were bought by developers at above $500psf ppr (PSF per plot ratio) to developers “aka - developer land cost” and prices for these ECs to simply breakeven would be at ~ $1,000psf range. That means the same 753sqft 2br EC sold in Northwave above would easily cost $753,000 today. A $166,000 or close to 30% increase in prices.

So the question now is, are ECs still a worthy option for HDB upgraders or First Timer buyers alike?

Looking back at the latest EC launches in 2017,

  • Hundred Palm Residences (Ang Mo Kio) sold out all 531 units on launch day.

  • Rivercove Residences was over 2.5x oversubscribed and sold out by end of 2018. (Rivercove was already selling at $976psf)

What about Resale ECs? Esparina Residences (Buangkok) and Prive (Punggol) ECs which have reach it’s 5yr MOP have already breached the $1,000psf mark easily.

Why do people bother with ECs? With so many restrictions for buyers (income, nationality, family nucleus), its as good as applying for BTO actually.

ECs will continue to be the affordable option if one wants to upgrade to a private property. In fact, first time home buyers will be given CPF Grants of up to $30,000, further enhancing the affordability of an EC.

It is also because of the very same restrictions, that ECs are able to be priced lower than its full fledged private counterpart just next door.

The highly anticipated EC in Tampines (expected early 2020) are surrounded by other private condos which have easily sold for $1,300-1,500psf. Not too long ago, these $1,300-1,500psf were the PSF values of prime freehold condos in East Coast :D

So even if the new ECs will be launched at above $1,000psf, they are still perceived to have strong value and affordability to many home buyers in future. Also take note that EC buyers are forced to wait out 7-9years before they can actually sell (2-3yrs for developement + 5yrs Minimum Occupation Period).

That means they are essentially riding out 2 private property cycles on average. This enables them to gain higher capital appreciation over close to a decade.

For clients who are interested in upgrading to an EC, source of funds for purchase deposit (25% of purchase price + ~3% stamp duty) plus the additional 2-3yrs wait for completion, hinders the aspirations for many upgraders. A tunnel vision towards a brand new EC further curbs their property progression.

Newly MOP EC, the best option a HDB upgrader has. Truly an undiscovered gem.

Is there a way to enter the EC wave without being hit by all these restrictions? Yes there is. What if you can buy into the EC or Private Condo market at below $1,000psf? That means you can get a 3bedroom easily for $800,000 to $900,000, and these units are barely 5 years old.

Yes there are such options, if you are still reading till this stage and you want to move up to an EC without paying the ridiculous resale levies and be stuck in the crazy logistics of selling and buying a new launch EC, drop me a text below through whatsapp and we’ll see what the best options are for you.