Some privatised executive condominiums (ECs) are still in high demand and notching up huge gains despite the cool property market.
Just ask OrangeTee associate director Alan Yap, who gets calls every week for units he is marketing at Bishan Loft. “Newer and pricey condos in the area – Sky Vue and Sky Habitat – have helped Bishan Loft prices appreciate,” said Mr Yap.
At Nuovo in Ang Mo Kio, which he also markets, prices have roughly doubled since launch.
Buyers at Wandervale EC in Choa Chu Kang, which was launched earlier this month, may be hoping for a similar price appreciation, as will potential buyers for two more ECs launching in the second quarter, Parc Life and The Vales. But the much higher average prices of ECs launched from 2010 – about $700 to $800 per sq ft (psf) compared with mid-$300 to mid- $400 psf previously – mean profits will not be as big.
“Launch prices back then were very low due to the weak economy and events impacting property prices, including the Sars crisis,” said R’ST Research director Ong Kah Seng.
Prices of older ECs rose from about 2010, propelled by low interest rates that sent housing values soaring. In contrast, recent launch prices of ECs are nearer the $1,000 mark, a level which a resale EC unit seems unlikely to cross in the near future, said Mr Ong.
At about $1,000 psf, buyers have many other options, such as a new 99-year leasehold condo, though it may not be near an MRT station – for instance, High Park Residences in Sengkang where average prices are about $970 psf. They may even be able to get older, freehold condos, Mr Ong added. Not only are today’s ECs priced much higher than before, but the price gap between them and new suburban condos may be slightly smaller now.
At the time the privatised ECs were launched, new suburban condos sold at about $500 to $600 psf, although prices in Bishan had already hit about $1,000 psf.
Suburban condo developers have been reducing prices in view of the ample supply of private homes. Besides High Park Residences, Symphony Suites condo in Yishun Close launched at an average price of $1,000 psf last year. In comparison, average prices at The Criterion EC, also in Yishun, are about $795 psf.
Ten years or so after both are completed, about 85 years will be left on their leases. If sold in the resale market then, and in a weak market, Symphony Suites prices could be as low as $900 psf, putting pressure on prices at The Criterion EC, said Mr Ku Swee Yong of Century 21 Singapore.
EC developers may not have been as motivated to cut prices in recent times, given government grants for EC buyers and the increased income ceiling cap last year. It was hoped these factors would spur demand.
In fact, prior to Wandervale EC, which launched at about $755 psf, recent EC releases were priced close to $800 psf.
There is also the issue of abundant supply. There were 3,450 unsold EC units at the end of last year, with another 3,200 homes expected from EC projects yet to be released.