EC News | Executive Condo News

The authorities have weighed in on the issue of e-applications for executive condominiums (ECs), saying that developers of ECs are not allowed to offer incentives to buyers who have not booked units.

Developers are also required to engage independent auditors to audit their sale processes to ensure they fulfil their obligations.

A spokeswoman for the Housing & Development Board (HDB) said: “The Ministry of National Development (MND) and the HDB take a serious view of any malpractice by developers. Any feedback on malpractice by EC developers or their marketing agents is fully investigated. The authorities will not hesitate to take action against errant parties.”

HDB added that while EC developers may decide on the mode of sale and engage marketing agents to handle the process, they must comply with the Conditions of Tender and the Building Agreement to conduct the sale of EC units fairly and transparently.

These comments to The Business Times follow the newspaper’s recent study of EC projects launched since 2014, which had showed poor sales in many EC projects – contrary to the strong e-application numbers that developers claimed to have received.

During their launch weekend, half the 14 EC projects fell short of a 20 per cent conversion rate – that is, the number of e-applicants who went on to buy a unit. This 20 per cent was at the lower end of what most industry players deem reasonable in today’s market.

Nine projects were over-subscribed for their available units; three others were almost fully subscribed during the e-application stage.

Some industry players warn of a potential supply overhang of ECs in the short-term, particularly for projects launched back to back in the same area; such projects end up vying for the same pool of eligible buyers and may have overlaps in e-applicants.

But market talk has been rife about e-application numbers being bumped up to create an impression of high demand; some developers were said to have offered agents supermarket or cash vouchers to incentivise e-applications. There have also been unverified tales of e-applications from earlier EC projects being used for subsequent ones, and agents signing up friends or relatives as e-applicants.

As expressions of interest without cost or obligation, e-applications do not require buyers to submit documents showing their eligibility. But developers have wasted little time trumpeting strong e-application numbers to the press ahead of booking day.

ECs are public-private hybrids with initial-buyer eligibility and resale restrictions, which are fully lifted a decade after the completion of the project. The government awards EC land parcels through public tenders to private developers, who undertake the development and sale of the ECs to eligible buyers.

The HDB spokeswoman said that under the Executive Condominium Housing Scheme (Eligibility) Regulations, an “applicant” refers to any person who has applied to buy an EC, including e-applicants.

“For e-applications, there are built-in checks in the system to ensure that applicants meet the eligibility criteria,” she said. “While developers are in charge of managing and processing the applications, the HDB also counter-checks the income and supporting documents subsequently submitted by the buyers to verify that they meet the eligibility criteria.”

Applicants may not go on to book a unit for a variety of reasons. For instance, the units they want may not be available by the time their turn is due, or checks reveal that they have fallen short of the eligibility criteria.

At the pre-launch briefings typically held for developers of upcoming EC projects, the HDB has lately reminded developers to ensure that the e-applicants are eligible for this class of housing and have genuine buying interest.

Two EC projects are slated to begin their e-application this month or the next, namely Hao Yuan’s Northwave in Woodlands and Sim Lian’s Treasure Crest in Anchorvale Crescent.

A spokesman for Hao Yuan told BT that the 358-unit Northwave will conduct its e-applications “in a manner that complies with the Executive Condominium Housing Scheme Act”, and that it will require e-applicants to submit their personal documents so that their identities, relationship and income level can be assessed for eligibility.

“The e-application will culminate in a balloting exercise, overseen and witnessed by external auditors on-site, which will determine the order these successful applicants get to select their units for purchase.

“We will not be providing potential buyers with gift incentives for e-applications, although we might extend discounts and/or freebies to eligible e-applicants when they eventually decide to buy a unit.”

Sim Lian group executive director Kuik Sing Beng said the group has not incentivised marketing agents for e-applications in the past.

“That’s why our conversion rates have been high,” he added.

Its Wandervale EC project in Choa Chu Kang hit a 33 per cent conversion rate on e-applications; the take-up rate on available units during its March launch weekend was 49 per cent.

E-application for the 504-unit Treasure Crest is to start in early July.

But some industry players observed the lack of clear boundaries for pre-sales marketing of EC projects.

ERA Realty key executive officer Eugene Lim said: “It would be useful for HDB to set up clear guidelines for developers so that they can follow them in the spirit of fair play and transparency.”

At the end of the day, it is the conversion rates that matter, he added.

But Century 21 Singapore chief executive Ku Swee Yong said that fairness and transparency in the conduct of EC sales can be compromised if genuine investors feel pressured by media releases of high subscription rates and the crowds in the showflats.

“I think that e-applications should all be vetted, and only qualified buyers being allowed to get balloting numbers. If we make sure that all e-applicants are qualified buyers, the conversion rates will be much higher.”

Earlier this month, the Controller of Housing issued a circular to licensed housing developers, reminding them to comply with the rules when offering any incentive scheme to buyers of private residential properties.

Developers were reminded, among other things, not to offer any incentive to buyers before the exercise of the option to purchase, if such incentives circumvent the requirement for buyers to pay the minimum booking fee.

This came on the heels of creative incentives by developers to move units. Among them was the “specimen cheque scheme” introduced by the joint developers of GEM Residences, which offered potential buyers cheques of S$7,500 or S$10,000.

These potential buyers, who used these cheques for their expressions of interest, were told that the cheques would be used to offset the booking fees on balloting day. But the developers were later directed by the Controller of Housing not to proceed with the use of these 2,500 cheques because the scheme goes against the requirement of a minimum 5 per cent booking fee when buying a home.

Source: http://business.asiaone.com/property/news/hdb-reminds-ec-developers-against-dangling-pre-sale-carrots

This article was first published on Jun 22, 2016 by The Business Times

New private home sales, excluding executive condominiums (ECs), rose by 41 percent month-on-month in May to a ten-month high of 1,056 units, helped by the launches of Gem Residences and Stars of Kovan, as well as broad-based pickup, revealed a Credit Suisse report citing data from the Urban Redevelopment Authority (URA).

Year-on-year, developer sales surged by 64 percent from the 638 units sold in May 2015.

However, sales of new ECs plunged by 39 percent month-on-month to 332 units in May, due to the lack of new EC launches, said Credit Suisse.

The report stated that the launch of Sim Lian’s Treasure Crest EC may be delayed after sales at Parc Life EC in Sembawang were muted, with only 71 of the 628 units sold to date.

Meanwhile, the five top-selling projects last month were Gem Residences, Stars of Kovan, The Poiz Residences, Bellewaters EC and The Vales EC.

Source: http://www.propertyguru.com.sg/property-management-news/2016/6/128096/5-best-selling-projects-in-may-2016?utm_source=pgsg-newsalert&utm_medium=edm&utm_campaign=dailynews-16Jun2016&utm_content=links

Bellewaters Executive Condominium

A lot of Singaporeans think of their house as a retirement plan. Come the age of 65, when we walk out of the office for the last time, we’ll need some sort of income. If the plan is to look at the house, then it’s logical to ponder which type is the real money maker. Not everyone can get a condo, so…should you look at BTO, ECs, or resale for the most profit?

BTOs vs ECs vs resale…Which is the best option if you were to choose?

A caveat: location trumps all

For the purposes of argument, assume that the following pertains to units in the same general location. Otherwise, location is a more significant determinant of flat values, when compared to the type of flat in question.

1. BTO flats

The main advantage of Built-to-Order (BTO) flats is that initial prices are the lowest. Singaporeans tend to over-estimate the cost of BTO flats, perhaps because of an old (and no longer relevant) practice of HDB to peg new flats prices to resale prices.

With new and old flats being “de-linked” in 2011, the prices of BTOs are much more affordable. In 2015, for example, eight in 10 BTO flats (four-room units) were sold for under $350,000. In non-mature estates, such as Punggol, four-room flats could be had for as little as $295,000.

The most famous examples of BTO appreciation are in Punggol and Sengkang. Between 2003 to 2005, these estates were (and still are) non-mature. They had fewer amenities than estates like Bedok or Queenstown, which had already seen a build-up of malls, parks, eateries, etc. over the years. In order to compensate for this, BTO prices were low.

In Punggol between 2003 to 2005, the price range of BTO flats was between $138,000 to $178,000. As of 2015, the resale price range is between $373,000 to $575,000. This is a 223 percent increase in around a decade!

During the same period in Sengkang, BTO flats ranged between $129,000 to $202,000. As of last year, resale prices were around $356,000 to $615,000. This is an increase of about 204 percent.

Note, however, that supply is also a factor. It is unlikely that similar profit margins will be seen in Punggol and Sengkang in the coming years; this is because more new flats have now been launched there, and once these BTO flats go on the resale market (after a Minimum Occupancy Period of at least five years), the rising supply will put downward pressure on the prices.

Ultimately, BTOs derive such high profit margins because you are buying at a discount. Apart from the usual housing subsidies, you are being compensated for putting up with initial inconveniences – you have to wait two to three years for the flat to be built, and you will probably have a flat in an underdeveloped estate. The pay off will only come much later, when the amenities in the estate are built up.

2. Resale flats

To be blunt, buying a resale flat is probably going to net you the lowest profit when you sell it again. This is because resale flats are primarily bought for reasons beyond profitability.

As an example, consider the famous “million dollar” resale flats, such as a Maisonette at Bishan that was sold for $1.01 million on April 2015, or a Queenstown flat that sold for a comparable price in September 2012. It goes without saying that the buyers of these units don’t expect to make huge profits – given that they have already paid large sums for their resale units, it’s unlikely that the value will appreciate beyond the sums they’ve paid in even 10 or 15 years.

But let’s come down to more typical resale flats. Prior to 2014, you could see the premium you were paying on the flat, before you bought it. This was the Cash Over Valuation (COV), which was paid in cash, on top of the actual value. Under new regulations the COV is hidden – you negotiate the price and get the Option to Purchase first, then a valuation is conducted (and you find out if you paid more or less than is necessary). In addition, information regarding COV is no longer published by HDB.

However, this does not mean the COV has vanished. The seller of a resale flat (with the current exception of the present, see below) is almost certainly going to want a premium. After all, if you bought the flat as a BTO, wouldn’t you want to sell for a profit after five to 10 years?

The reason buyers tolerate the higher price is that the flat is already built. There’s no wait time, and it is one way to immediately get a flat in a mature area. Also, some buyers – such as families with only Permanent Residents and no Singapore citizens – can only buy resale flats.

Note that, at present, it’s possible to get a resale flat with no COV, or even under valuation. This is because of the current property downturn, which has created a buyer’s market. You can view some of these properties on 99.co.

Expect higher initial prices, of around $400,000 to $500,000 for a four-room flat, and over $600,000 for five-room flats. Rental yields tend to be around 7 percent. Potential resale profits depend on when you sell (right now it could even be zero or a loss), but will probably never rival BTO flats on account of the higher initial cost.

3. Executive Condominiums

The price gap between Executive Condominiums (ECs) and private condominiums narrow significantly after privatisation. As of 2015, it’s been noted that the price difference between ECs and private condos is around nine per cent after the Minimum Occupancy Period (MOP), and just five percent after privatisation.

In short, given enough time to reach privatisation, the returns from an EC come close to that of a private condo, with about a difference of five percent. And condo prices are, hands down, the ones that seem to appreciate the fastest.

Let’s go back to Sengkang, the favoured example of those who treat BTOs as an investment. Yes, it’s impressive that the prices here appreciated by around 204 percent, but it took around a decade to do so. Condos in the Sengkang area, however, appreciated from $874 per square foot to $1,094 per square footbetween 2011 and 2014 alone. That’s over a 25 percent increase. If we compare HDB flats in Sengkang at the time, they rose in price from $418,000 to $420,000 – or less than one percent.

Or consider condos in developed areas – within the same period of 2011 to 2014, condos in the Bedok area rose from around $900 per square foot to over $1,072 per square foot, an increase of around 19 percent. By contrast, flats in the area rose around 16 percent, from $450,000 to around  $530,000.

Rental yields from condos tend to be lower than flats however, at around just four percent.

While BTO flats may show impressive returns over 10 years, they are still not quite on par with condos. This suggests that, if you have an eye toward capital gains, condos are still your best bet. And an EC comes close to the performance of a private condo, given time – your main hurdle will be waiting for it to get privatised.

So in order of making money, our estimation is that ECs come first, followed by BTO flats, and resale units last.

Source: https://www.99.co/blog/singapore/bto-vs-ec-vs-resale-better-money-maker/

See this comprehensive guide by The Edge Property to buying executive condominiums, useful for all buyers interested in Singapore ECs.

http://www.theedgeproperty.com.sg/content/guide-buying-executive-condominium

UPDATED: Despite the increase in land supply for new private homes in the confirmed list of the second half 2016 Government Land Sales (GLS) Programme, no new sites were released for executive condominium (EC) development.

Credit Suisse said this is the first time since the start of 2008 that no EC site was released on the confirmed list, but it didn’t come as a surprise due to oversupply concerns in the market.

In fact, 13 EC projects already launched have only sold an average of about 50 percent of units, revealed a report from the financial services company.

Separately, OrangeTee noted that there are still 4,010 unsold EC units as of end-April 2016.

In a report, the property agency said, “Assuming that the Sumang Walk EC site (released for application under the reserve list of the second half 2015 GLS Programme) is not activated, and the 15 month waiting period for developers remains unchanged, the tapering of EC land supply could lead to a dearth of EC launches in 2017 and the first half of 2018.”

Two EC projects at Choa Chu Kang Avenue 5 and Yio Chu Kang Road are expected to launch next year, while only one project at Anchorvale Crescent is set to hit the market in 2018, said OrangeTee.

In a blog post, National Development Minister Lawrence Wong said the government considered several factors in determining the land quantum for the second half of the year.

“We are mindful that excessive supply in a weak market can exacerbate a decline in prices. At the same time, insufficient supply can result in a future shortage and an unwarranted spike in housing prices when demand picks up.

“We will continue to monitor the market closely, and find the right balance to ensure sustainable housing prices and a stable property market,” added Wong.

On Wednesday (8 June), the government launched four sites for sale under the confirmed list for the second half of 2016, and an additional 11 sites on the reserve list. This could yield up to 7,550 residential units, compared to the 7,420 units in the first half of the year.

Source: http://www.propertyguru.com.sg/property-management-news/2016/6/127573/dearth-of-ec-launches-in-2017?utm_source=pgsg-newsalert&utm_medium=edm&utm_campaign=dailynews-09Jun2016&utm_content=links

Developers sold 546 Executive Condominium units in April, as compared to 485 units sold in March. This was due to the launch of two Executive Condominiums in Sembawant – The Visionaire and Parc Life.

Besides these two ECs, sales was healthy at previously launched EC projects including The Vales (51 units sold), The Amore and Wandervale (49 units sold each).

Read more

Sales at recently launched executive condominiums (ECs) have not been stellar despite the large number of e-applications received, reported The Business Times.

But many property experts feel it is still acceptable in today’s market if 20 to 30 percent of the e-applications translates to sales. However, seven out of the 14 EC projects launched since 2014 failed to achieve even the minimum conversion rate during their launch weekend.

The latest EC to launch was the 628-unit Parc Life. Jointly developed by Frasers Centrepoint Limited and Keong Hong Holdings, it only sold 51 units during its launch last weekend despite recording over 700 e-applications.

During the week prior to that, Qingjian Realty’s The Visionaire sold 158 units out of 632 units, even though it attracted 859 e-applications.

In comparison, the number of e-applications some EC projects received during the market’s heyday in 2011 to 2013 easily surpassed the volume of units offered by two times, said Tan Tee Khoon, Managing Director of KF Property Network.

According to Nicholas Mak, Executive Director of SLP International, the low take-up rate is due to the large supply. “It’s just too much for the market to digest in that span of time (as) demand for ECs in suburban areas tend to be limited to upgraders or people who live in the area.”

This is especially true for developments being built in the same area and launched at roughly the same time, as they are competing for the same pool of eligible buyers who most likely submitted e-applications for multiple ECs.

For example, Parc Life and The Visionaire are both located in Sembawang, in the same neighbourhood where The Brownstone made its debut in July 2015. In Yishun, The Criterion was unveiled last October, followed closely by Signature At Yishun.

Meanwhile, Century 21 Chief Executive Ku Swee Yong believes the weak sales “are conclusive evidence that demand is exhausted” for this type of property. Based on the current pace of EC transactions, he thinks the market needs at least two years to fully absorb the remaining unsold units.

Source: http://www.propertyguru.com.sg/property-management-news/2016/5/124408/high-ec-e-applications-won-t-guarantee-good-sales?utm_source=pgsg-newsalert&utm_medium=edm&utm_campaign=dailynews-06May2016&utm_content=links

Sim Lian Group announced that 82 four-bedroom units at its Wandervale executive condominium in Choo Chu Kang were the first to be completely sold.

Meanwhile, approximately 60% of the 534-unit development has been booked as at April 19, 2016. Of the 320 units sold to date, about half of them were booked by HDB upgraders. Currently, 85% of Wandervale EC homebuyers have addresses within the vicinity of Choa Chu Kang, Bukit Panjang, Bukit Batok and Jurong West. Larger units remain the most popular option amongst HDB upgraders and young families.

Units at Wandervale are launched at an average price of $755 psf. Prices start from $655,000 for a three-bedroom unit, $753,000 for a three-bedroom premium unit and $896,000 for a four-bedroom unit.

Source: http://www.theedgeproperty.com.sg/content/four-bedroom-units-wandervale-sold-out