Exec Condo market set to stir with launch of new projects

Source : Channel NewsAsia – 12 Aug 2010

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 (CBRE), Executive Condos are making a comeback after a hiatus of five years as the government steps in to ramp up the supply of flats 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 launch another 2,600 EC units.

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

CBRE said the comparatively less expensive 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 S$650 to S$750 per square foot.

He 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 2009, with only 36.1 per cent of them making new home purchases in the second quarter.

At its peak in Q1 last year, the proportion of HDB upgraders reached 63.6 per cent but it has steadily declined 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.

Another factor pushing them towards ECs was the lowering of the housing loan limit from 90 per cent to 80 per cent since March this year, which meant that HDB home buyers need to pay more cash upfront.