What ARE Executive CondominiumS (ECs)?
Executive Condominiums (ECs), subject to public housing rules, were introduced to cater to Singaporeans, as a cheaper alternative to private condominiums. ECs are comparable in design and facilities to private condominiums. Since the first EC, Eastvale at Pasir Ris Drive 3 obtained its Temporary Occupation Permit in 1999, every EC launched since then has appreciated in price. This analysis explores why Executive Condominiums (ECs) are a popular choice till date.
To check out available EXECUTIVE CONDOMINIUMS on Empower-Property Website, click here
What is the appeal of Executive Condominiums (ECs) ?
1) Security. No strange characters can lurk at your void deck and pose a threat to you, your children and loved ones. Loansharks will not be able to enter.
2) Facilities. Facilities such as a clubhouse, tennis courts, basketball courts, BBQ areas, swimming pools are at your doorstep. This makes it very appealing to families. Swimming pools are the main draw. Not only do they provide children a place to have hours of fun, the elderly welcome pools as swimming is the best low impact exercise to keep fit.
3) Facilities are exclusive. Only accessible to residents, their family and invited friends, these facilities are generally not as packed as public facilities.
4) Maintenance fees and sinking fund is reasonable. With monthly maintenance fees and sinking fund contribution ranging from $200 to $300, one is entitled to carparking. Comparing with public housing, it is just $100 to $150 more.
5) Capital Appreciation. As Executive Condominiums (ECs) are usually priced cheaper at launch price than comparable mass market condos, there is a “default” built in upside.
6) Quality is comparable to mass market condominiums. Just because Executive Condominiums (ECs) are typically priced lower than a mass market condo, it doesn’t translate to inferior finishing and shoddy workmanship. As the land is usually bid at a lower price, there is enough margin for Executive Condominium (EC) developers to provide quality finishing and still make a decent profit. EC developers save money by building multi-storey carparks where possible instead of basement carparks to save on excavation cost.
7) Good potential rental yield. New launch Executive Condominiums’ (ECs) design and facilities are comparable to those of private condominiums despite being priced lower and appeal to the same pool of tenants who want condo facilities.
Why are Executive Condominiums (ECs) cheaper than other mass market Condominiums?
1) Pool of buyers is smaller. The smaller the pool of customer, the more limited the developer can raise its price. Foreigners cannot buy new launch Executive Condominiums (ECs) directly from their developers. Executive Condominiums (ECs) developers can only sell to Singaporeans or Singaporean centric family nucleus unit.
2) The maximum loan of customers (hence their budget) is controlled. With the income ceiling currently set at $14,000, and the Mortgage Servicing Ratio set at 30% by the government, customers will not be able to over-leverage themselves. Customers can loan only up to a maximum of about $935,000 (If their income and current debt obligation allows). Hence developers cannot set sky high prices for Executive Condominiums (ECs) which will alienate potential Singaporean buyers.
3) Lower land costs. Because Executive Condominiums (ECs) developers need to keep prices within reach of their target customers, they cannot risk overbidding for land to win at all cost. Reckless bidding will mean they have to sell their inventory at higher price to recover their land, construction, financing, marketing and administration cost.
Given the above 3 inter-related reasons, Executive Condominiums (ECs) new launches are usually priced at a discount to comparable private condos.
What to take note of when you buy an Executive Condominium (EC)?
- Deferred payment scheme is available. 20% down payment, 65% upon TOP and final 15% upon legal completion. This is not available for private condominiums.
- You, as owner has to fulfill 5 years minimum occupation period (MOP) and cannot sell within 5 years from obtaining the Temporary Occupation Permit (TOP) .
- You can still invest in commercial/industrial property as long as there is no residential accommodation component in the commercial unit.
- If you are a first timer buying under a family nucleus scheme, you can qualify for a CPF Housing Grant of $20,000/$30,000.
- Your Executive Condominium (EC) can be sold under private property status after MOP of 5 years to Singapore Citizens and PRs, and to foreigners after 10 years
- If you are currently the owner of a public housing unit, you have to sell or transfer it when you take ownership of your Executive Condominium.
- New Executive Condominium.projects from Westwood Avenue onwards will attract a resale levy for 2nd timer applicants of “subsidised” housing such as Executive Condominiums (ECs). EC units in projects that were launched before 9 Dec 2013 are exempted from resale levy.
To check out available EXECUTIVE CONDOMIUMS on Empower-Property Website, click here