Executive Condominiums (ECs) have been among the best-selling projects this year. Six of the 10 top selling projects in April were ECs.
Wandervale, the top seller in March, saw about 50 per cent of its units sold during its launch weekend. Launched developments are also seeing a pick-up in buyer activity. The Terrace was the best seller in February and has been seeing a constant stream of buyers, with nearly 80 units sold in March and April. A total of 51 units were sold at The Vales in April, while Bellewaters, an EC launched in 2014, is now close to 90 per cent sold. Projects approaching completion, such as Ecopolitan, Forestville and Sea Horizon have also managed to find buyers for almost all their units.
A hybrid between public and private housing, ECs cater to the needs of the “sandwich” class — those whose household incomes exceed the ceiling for public housing but are not quite yet able to afford a private property. As such, ECs come with a set of eligibility criteria to ensure affordability for this select group.
As with public housing, EC applicants must either form a family nucleus or join up with other singles if they are at least 35 years old. They must also not exceed the household income ceiling of S$14,000. Only Singaporean couples and Singaporean/permanent resident couples can buy an EC unit. Also, buyers have to fulfil a mandatory five-year minimum occupation period (MOP) before they are can rent out or sell the EC unit.
Despite these restrictions, ECs come with a full suite of condominium facilities and are generally comparable to private developments in design.
WHO ARE THE BUYERS?
ECs appeal to two main groups of buyers. The first group is made up of first-timers who are looking to get married in their early 30s. At this age, some couples would have a combined monthly income of about S$10,000 and some savings. This group also tends to be more financially savvy and are aware that at their level of income, they have a choice between applying for a Build-to-Order Housing and Development Board flat and buying an EC.
Those who choose to buy an EC are doing so for the lifestyle. Essentially, an EC is a subsidised private condominium. First-timers are eligible for a Central Provident Fund family grant of up to S$30,000. They are also exempt from paying the resale levy, which could be as much as S$50,000. All in all, first-timers stand to “gain” as much as S$80,000.
We observe that income levels of first-timers are clustered around the S$10,000 threshold, which indicates that most of the first-timers are buying ECs to maximise the grant amount. In some EC projects, first-timers account for the majority of the buyers.
The other source of demand of ECs comes from upgraders, or second-timers. This group mainly consists of families with children and they are looking to make the transition to private housing. In upgrading, they choose between an EC and a private development.
Here, ECs hold an advantage. ECs are physically indistinguishable from private developments and come with condominium facilities. In today’s competitive market, some ECs are also coming up with innovative ways to differentiate themselves. For instance, The Visionaire at Canberra offers 28 free lifestyle classes to residents. In addition, it is also the first EC to incorporate smart home technology.
Yet, ECs hold a clear pricing edge over condominiums. Despite being essentially the same housing product offering the same quality of living, ECs are typically sold at a discount of about 20 per cent to comparable private condominiums. The only difference is the five-year MOP and resale restrictions from the fifth to the 10th year.
WHERE SHOULD I BUY?
As the adage goes: Location, location, location. This is, without a doubt, one of the most important considerations when buying a property. Also factored in are any future plans by the Government as these usually have an effect on property values.
An upcoming residential hotspot is the Northern Region, comprising Sembawang, Woodlands and Yishun. The Urban Redevelopment Authority, in its 2014 Master Plan, outlined plans for the development of the Northern Region, spearheaded by Woodlands Regional Centre. Currently in its gestation stage, Woodlands is envisioned to grow into Singapore’s third regional centre, after Tampines and the Jurong Lake District. It will become a major employment hub and this is expected to have spillover effects on housing demand in the neighbouring towns of Yishun and Sembawang.
In addition, various infrastructure improvements have been introduced to improve connectivity. The North-South Corridor and the Thomson-East Coast Line are two major projects that will reduce travelling time to and from the north for commuters and drivers. This will further increase the attractiveness of housing estates in the north.
The North-East Region is also a popular destination for EC buyers. In May, the best-selling ECs were all located in Punggol and Sengkang. Anchored by the Punggol Creative Cluster and Learning, Punggol is set to be transformed into a space for innovative new industries, creating many employment opportunities in the process. Seletar Aerospace Park is another important development in the North-East Region. Currently home to multinational companies such as Rolls Royce and Airbus Helicopters, it is envisioned to create up to 10,000 jobs when completed.
Another area to take note of is Jurong. In Budget 2016, the Jurong Innovation District was unveiled. Scheduled to be completed by 2022, it aims to bring together students, researchers, innovators and businesses to create the industrial park of the future. The employment generated is expected to boost housing demand in the vicinity.
In conclusion, ECs provide a very viable option for buyers to consider, either as their first home or an upgrading option. However, not just anyone can buy an EC. The purchase of an EC is only for those who meet the stringent eligibility criteria. This select group of people should capitalise on this opportunity to own an EC and with it, a whole new lifestyle.
ABOUT THE AUTHORS: Eugene Lim is Key Executive Officer and Seah Yao Hui is Research Analyst at ERA Realty Network.