The news says exec condos are sexy again

Published 26 May 2011
The Business Times
By Kalpana Rashiwala

Belysa project feels the buzz while fresh site worth some 720 homes is launched

Executive condos, a hybrid of public and private housing, are back in the spotlight.

More supply, but bids for EC site still holding up
More supply, but bids for EC site still holding up

Yesterday, the government launched the 11th EC site since last year, a plot in Punggol that can yield about 720 homes; while in the Pasir Ris/Elias Road area, NTUC Choice Homes and Chip Eng Seng did brisk first-day sales for their Belysa project.

As at 5pm yesterday, they had sold 147 of the total 315 units in the 99-year leasehold project, which was priced at $670 psf and comprises three- and four-bedroom units.

‘There is a big market for EC units priced between $600,000 and $700,000,’ said CB Richard Ellis executive director (residential) Joseph Tan. That is because the price gap between EC projects and 99-year suburban private condos has widened once again.

Typically the price gap used to be around 25-30 per cent when ECs were introduced in 1996 to cater to the sandwich class of buyers, he said. This spread narrowed over the years because of weak suburban condo prices, resulting in dwindling demand for ECs. Before the latest wave of new EC projects rolled out last year, the last EC project had been launched in 2005, namely La Casa in Woodlands.

However, the sharp recovery in 99-year mass market condo prices has revived the demand for ECs.

‘Today, 99-year mass market condos which are not near an MRT station could be priced around $900-950 psf on average while an EC project in a similar location would be around $650-700 psf,’ said Mr Tan.

Many analysts expect the monthly household income ceiling for ECs to be raised from $10,000 to $12,000 or higher, assuming the government proceeds to raise the ceiling for those buying new Build-To-Order (BTO) flats from the HDB from $8,000 to $10,000 pending a review.

‘That will create more realistically-priced alternatives for the sandwich class and siphon off some demand from 99-year mass-market private condos,’ reckoned Mr Tan.

On the other hand, ERA key executive officer Eugene Lim suggests increasing income ceilings for buyers of ECs and DBSS (Design, Build and Sell Scheme) flats – these are HDB flats designed and developed by the private sector – could boost demand for these homes and lead to developers bidding higher for EC and DBSS sites. This in turn may result in higher prices for DBSS flats and EC projects but could have little impact on the private condo market.

Credo Real Estate executive director Ong Teck Hui points to the uneven sales performance in the first four EC projects released since last year. Esparina Residences and Prive have fared better than The Canopy and Austville Residences. ‘The better performing projects were nearer to MRT stations and realistically priced.’

Knight Frank’s research head Png Poh Soon observed that while there are now fewer bids for EC sites compared to March 2010, prices of well-located sites have held up well.

Most property consultants expect top bids for the latest EC site at Punggol Way/Punggol Field launched yesterday to be in the $300-350 psf per plot ratio range, and with the average selling price for the project likely to be around $700-750 psf.

Credo’s Mr Ong said some EC developers may be more cautious about bidding for this site if they are concerned that the income ceiling for EC buyers will stay unchanged while that for HDB BTO flats is raised. In such an event, more people would qualify for new HDB flats and this would lower demand for ECs.

An EC developer told BT that he is worried about the substantial supply all round. The government has pledged to sell land for 4,000 ECs and 4,000 DBSS flats in 2011, up from about 4,000 ECs and 3,000 DBSS flats last year. HDB will also offer up to 22,000 BTO flats this year.

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