The price of executive condominiums have shot up almost 25 per cent due to the supply and demand imbalance say property market observers.
JLL in noting that the supply of executive condominiums are drying up said “only three new EC units were sold in December 2018, from among the few left-over units in new EC projects.”
It added: “An EC in Rivercove Residences was sold for $964 psf while two units in Northwave were sold at a median price of $908 psf. The year as a whole saw 628 new ECs launched and 1,137 units taken up. The supply and demand imbalance resulted in the median prices of new ECs shooting up from $793 psf in 4Q17 to $989 psf in 4Q18, a 24.7 per cent increase.”
CBRE too noted that the December sales data released by the Urban Redevelopment Authority (URA) indicated that just 3 units were sold from existing EC projects as there were no new launches. This brought the annual total of Executive Condominiums sold in 2018 to 1,137 units against 628 units from the only EC launch in 2018, which was Rivercove Residences, where median prices were already breaching $1,000 psf.
CBRE noted that this demand and supply imbalance is likely to favour the next launch of executive condominiums at Sumang Walk.
Nicholas Mak, executive director of ZACD Group said the demand for executive condominiums is expected to remain robust in 2019, but the supply of new EC launches will continue to be limited. He noted that while the number of executive condominiums launched decreased significantly by 59.6 per cent year-on-year in 2018, the number of units sold dropped correspondingly by 72 per cent over the same period.
He believes that the sales of new EC units will increase when the next EC project at Punggol is launched sometime in the 2nd Quarter of 2019. The EC project by City Developments Ltd is estimated to have 820 units and is located at Sumang Walk. “If priced reasonably, the take-up rate of this project is expected to be very high,” he added.
The 628-unit Rivercove Residences EC project was launched in July last year, and saw 80 per cent of the units snapped up on the first weekend at an average of $965 per square feet (psf).
Colliers International said that given the tight supply of executive condominiums over the next few quarters, the market continues to draw strong interest from developers.
Colliers said: “The Tampines Avenue 10 site, with 7 bidders, saw a close winning margin of 0.7% between the winning and second-highest bids. The appeal of this site is that it is a relatively large, regular size plot which can support up to 695 units, located in a mature housing estate surrounded by schools and amenities.”
It noted that”the last EC site sold was at Anchorvale Crescent which was triggered for launch from the reserve list in July last year, and hotly contested with 7 bids.”
Colliers further commented that the developers’ sales last month fell by 49.9% from November to 602 (excl. ECs), but were up by 39.7% against the 431 units transacted in December 2017. After accounting for units that were returned in the quarter, we estimated the total new home sales for the full 2018 to come in at 8,706 units, down by 17.6% from the 10,566 units in 2017 – broadly in line with Colliers’ forecast.
Including Executive Condominiums, developers sold a total of 605 new units in December.
But just a few years ago, with an oversupply of Executive Condominiums, the story was quite different for the EC market. The demand for Executive Condominiums were driven by their relatively affordable price points for the ‘sandwiched’ class. In recognising this demand, the Government opened for application several sites on its reserved list for Executive Condominium developments.
An Executive Condo is a hybrid type of housing under Singapore’s public housing scheme. In the past, Executive Condo was better known as Housing and Urban Development Company (HUDC) flats. The HUDC system was later overhauled and replaced with Executive Condo.
In the first 10 years of ownership, an Executive Condo takes the properties of an HDB. It is considered as a public housing, which means that the unit can only be sold to Singapore citizens or permanent residents. Furthermore, an Executive Condo will need to fulfil the 5-year minimum occupation period (MOP) before it can be sold on the secondary market, just like any HDB.
Executive condominiums take on the characteristics of an HDB in the first 10 years. But once an Executive Condo hits the ten year mark, it will become fully privatised – this is when the executive condominium will then take the properties of a private property.
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