Condo comeback

Source : Today – 13 Aug 2010

Government to ramp up flat supply for middle-income home buyers

The executive condominium (EC) market looks set to stir when new projects are launched over the next three to six months. According to property consultancy CB Richard Ellis, ECs are making a comeback after a hiatus of five years as the Government steps in to ramp up flat supply for middle-income home buyers.

Four new EC projects in Compassvale Bow, Punggol Field, Buangkok and Yishun – yielding some 1,400 units – will be launched in the next three to six months.

These sites were awarded in the first half of this year. The Government will also be selling another five EC sites later in the year – at Jurong West, Punggol Drive, Pasir Ris, Tampines and Segar Road – which are expected to yield about another 2,600 units.

The last EC launched was La Casa in Woodlands in 2005, which was completed in early 2008.

CBRE said the comparatively cheaper pricing of ECs is expected to attract a large number of HDB upgraders.

Executive director of CBRE Research Li Hiaw Ho said assuming the historical 30 per cent gap between private suburban homes and new ECs, the median prices of new ECs are likely to stay around $650 to $750 per square foot (psf).

The median price for private suburban homes as of the second quarter stood at $824 psf.

Ms Tay Huey Ying, director for Research and Advisory at Colliers International, expects prices for ECs to rise moderately. “It will still fall below private units in terms of absolute price per square foot simply because there are conditions attached,” she said.

For example, foreigners are not allowed to buy ECs. On top of that, those whose monthly household income exceed $10,000 cannot buy ECs.

Mr Li added that the prices of ECs will match those of comparable private apartments in the same locations after five years, as they will be treated as private properties.

Currently, the non-landed private home market is attracting a lower share of HDB upgraders compared to last year with only 36.1 per cent of them making new home purchases in the second quarter.

At its peak in the first quarter last year, the proportion of HDB upgraders reached 63.6 per cent but it has steadily dipped below the 10-year average of 44 per cent.

Mr Li said with the steep rise in prices of new private homes, more HDB upgraders face a bigger burden of servicing huge mortgage loans.

“The lowering of the housing loan limit from 90 per cent to 80 per cent since March this year also meant that HDB home buyers need to pay more cash upfront,” added Mr Li. “Despite this, HDB upgraders can find a less-costly alternative with the upcoming ECs.”

No bids received for EC site at Jurong West

Despite a buzz generated by a resurgence of the executive condominiums (EC) in the coming months, the Housing and Development Board (HDB) has received no bids at the close of the tender for an EC site at Jurong West Street 42 yesterday.

The land parcel has a land area of over 16,800 square metres and a maximum gross floor area of about 50,445 square metres.

It has a lease period of 99 years.

Launched on July 2, the call for tender closed yesterday at noon.

Analysts said developers are spoilt for choice as the Government has been releasing a lot of land.

Mr Nicholas Mak, a real estate lecturer at Ngee Ann Polytechnic said: “There are also growing concerns that there could be a growing oversupply due to the large amount of land that the Government is offering for sale in the present Government land sales programme.

“In addition, there is also the characteristic of this site, which is that it’s not within comfortable walking distance to the nearest MRT station.”

The second half of this year will see 27 residential sites and four mixed-use sites put up for tender via the Government land sales programme.

The 31 sites are expected to yield nearly 14,000 private residential units. This is the highest potential supply for any half-yearly period since the Confirmed and Reserve Lists system started in 2001.