An Analysis of a Valuable AssetClass, Executive Condominiums (ECs) - June 2019
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June 2019
Research Report
An Analysis of a Valuable AssetClass,
Executive Condominiums (ECs)
Artist’s Impression: Piermont Grand
June 2019
In this report, we will be covering the latest Executive Introduction to an Executive Condominium (EC)
Condominium (EC), The Piermont Grand at Sumang Walk, The government unveiled the concept of Executive
the various eligibility criteria to purchase an EC, the demand condominiums (ECs) in 1995 to cater to the aspirations
and supply and why ECs are a valuable proposition. of Singaporeans to own affordable private housing. ECs
are governed by the Executive Condominium Housing
Scheme Act and they are strata-titled apartments. An
EC is a hybrid between public and private housing. In
order to acquire an EC, a set of eligibility criteria has
to be fulfilled.
Eligibility Criteria for purchasing an EC
• Public Scheme
• Fiancé/Fiancée Scheme
Artist’s Impression: Piermont Grand
Family nucleus
• Orphans Scheme
• Joint Singles Scheme
Piermont Grand is the only EC that will be launched this
• Must bea Singapore Citizen
year. The project is situated right beside My Waterway @ • At least 1 other applicant must be a Singapore
Punggol, a 4.2km long waterway offering a wide variety of Citizenship Citizen orSingapore Permanent Resident
• All singles must be Singapore Citizens if
recreational outdoor activities. The project overlooks applying under the Joint Singles Scheme
Punggol Reservoir and Jewel Bridge at Punggol
• At least 21 yearsold
Waterway with scenic sunset views. • At least 35 years old, if applying under the
Age
Joint Singles Scheme
The project has a total of 820 units in its development. It • Household income must not exceed the
Income ceiling
provides an eclectic mix of units, ranging from 3 Bedroom $14,000 income ceiling.
to 5 Bedroom units. It is an estimated 10 minutes walk to • You do not own other property overseas or locally,
the Punggol MRT Station, Bus Interchange and Waterway or have not disposed of any within the last 30
Property months
Point Shopping Mall. The project is conveniently located ownership • You have not bought a new HDB/ DBSS flat or EC,
and well-linked to Tampines Expressway (TPE) and or received a CPF Housing Grant before; or, have
only bought 1 of these properties/ received 1 CPF
Kallang Paya Lebar Expressway (KPE). Additionally, it is in Housing Grant thus far.
close proximity to upcoming Punggol Town Hub with Source: HDB, *for detailed explanations on the schemes, please refer to the HDB website.
hawker centre, regional library, childcare and healthcare
facilities that are housed under one roof. In terms of Applicants purchasing an EC, have to form a family
nearby schools, it is positioned closely to Punggol Cove nucleus, with a household income not exceeding
Primary (< 1km), Punggol Green Primary (
June 2019
Supply and Demand of EC
Top 5 Bids for Sumang Walk
EC Units Launched Tenderers Tender Bid($) Bid Price Psf($)
CDL Constellation Pte. Ltd. $509,370,000 $583
3,750 and TID Residential Pte. Ltd.
3,337
Qingjian Realty (Residential)
$486,000,000 $556
Pte. Ltd.
2,749
Yanlord Singapore
2,505
Residential Pte. Ltd. and $450,000,888 $515
Soilbuild Group Holdings Ltd
1,555
628 Hoi Hup Realty Pte. Ltd.
and Sunway Developments $446,600,000 $511
Pte. Ltd.
2013 2014 2015 2016 2017 2018 Sing Development (Private)
Source: PropNex Research,URA
Limited, FEC Properties Pte.
Ltd. And Changi Properties $431,688,338 $494
Pte. Ltd.
EC Units Sold Source: PropNex Research,URA
4,011
Under the second half of the Government Land Sales
3,999
(GLS) Programme, the government announced that
3,588
there will be 2 EC sites. Both of these sites are expected
2,550
to yield an estimated 1,075units.
1,578
1,136
Upcoming EC Sites for GLS Programme
(2H2019)
2013 2014 2015 2016 2017 2018
Expected
Source: PropNex Research,URA Location Estimated Type Launch /
Units
Available Date
Fernvale Lane 480 Confirmed Dec-19
List
There has been a dwindling supply of EC units being launched
Tampines Street 62 595 Reserve List Dec-19
in the past few years, as the government has been closely
monitoring the supply of these units. The government considers Source: PropNex Research,URA
varying aspects in the planning for the supply of ECs. Factors
such as take-up rate of new EC units and the current market
sentiments. In order to calibrate the supply, developers of EC
sale sites from the GLS programme are only allowed to launch
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As ECs are in low supply, it is well
units for sale 15 months from the date of award of the sites or sought-after by buyers andinvestors.
There is a strong demand for EC
after the physical completion of foundation works, whichever is projects.
earlier.There was only 1 new launch of EC project in 2018,
which was Rivercove Residences. This development has
completed selling close to 100% of its units, as per data
retrieved from URA Realis on June 19, a total of 627 units out of
the 628 units have been sold. The Sumang Walk land parcel
was a highly contested site that attracted 17 land bids.
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June 2019
Buyer’s Limitations A simplified example on the application
1. Minimum Occupancy Period (MOP) and Ownership of TDSR and MSR
Restrictions for an EC
Potential Scenario: 1
Potential Scenario: 2
Purchasing a private
Purchasing an EC
condominium
Gross monthly income $10,000 Gross monthly $10,000
income
TDSR MSR
(60% of GrossIncome) $6,000 (30% of Gross Income) $3,000
Source: PropNex Research,HDB Source: PropNexResearch
An EC is subjected to a similar restriction as a public housing Assuming in the above potential scenario 1, the buyer
in the initial phase, as there are ownership restrictions in has zero debt obligations and is purchasing a private
place. Owners are required to satisfy a 5-year Minimum property, the buyer would be required to abide by the
Occupation Period (MOP) from the date of issue of the rules of the TDSR framework. Whereas, in scenario 2,
Temporary Occupation Permit (TOP), before they can sell or a buyer with zero debt obligations as well and is
rent their property, but only to Singapore Citizens and interested to purchase an EC, would be required to
Permanent Residents. Infringement of the rule, will lead to the adhere to the rules of the MSR framework. Based on
compulsory acquirement of the EC Unit by the HDB. the example given, there is a 50.0% drop in the loan
quantum that can be taken to purchase an EC. The
MSR framework limits buyer’s ability to acquire a
However, after the 10-year period, the higher quantum of loan as compared to buying other
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restrictions for ECs no longer apply, it private properties (excluding ECs).
becomes fully privatised and it canbe
sold to foreigners as well. Thus,
increasing its capital gain potential.
Unlike private properties, buyers are
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restricted from securing a higher loan
2. Financing Framework: TDSR vsMSR quantum, hence, developers are mindful
in setting their price sensitively for EC
The Total Debt Servicing Ratio (TDSR) was introduced by
developments.
The Monetary Authority of Singapore (MAS) in 2013, as a
framework for all property loans granted by financial
institutions to individuals. It was established to ensure
financial prudence amongst borrowers, as financial
Institutions are required to take into account of borrowers’ Why ECs are a Valuable Proposition?
outstanding debt obligations when granting property loans.
Any property loan issued by financial Institutions are required
not to exceed a TDSR threshold of 60%. Hence, the TDSR
limits the amount borrowers can spend on debt repayments
Source: PropNexResearch
to 60% of their gross monthlyincome.
Amidst the restrictions and limitations imposed on the
To further strengthen financial prudence amongst borrowers buyers of an EC, it does come with its set ofperks.
and to moderate demand, the government additionally
introduced the Mortgage Servicing Ratio (MSR) for buyers
who are purchasing ECs or HDB flats. The MSR granted by
financial institutions are capped at 30% of a borrower’s gross
monthly income.
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June 2019
OCR Land Bid Prices for Private
Quality
Properties (Excluding EC)
Firstly, in terms of design and quality, ECs are comparable in
Bidprice
nature with private condominiums. It possesses comparable Date
Awarded
Project Location $psfppr
amenities with private condominiums as well. Common 7-Feb-18 The Essence Chong Kuo Road $681
facilities such as swimming pools, tennis courts, gyms etc.
7-Feb-18 Whistler Grand West Coast Vale $800
Price 3-Jul-18 Midwood Hillview Rise $1,068
Median Price 16-Aug-18 Sengkang Sengkang Central $924
Median Price of Private % Discount Central
Project Launch of EC in the Property inthe in Price 7-Sept-18 Dairy Farm Dairy Farm Road $830
Year of EC Launch Year OCR Segment for EC Residences
Rivercove 22-Mar-19 Pasir RisCentral
Pasir Ris Central $684
2018 $973 $1,372 29.1% (Mixed-Use)
Residences
Average $848 psf ppr
Inz Residence 2017 $791 $1,311 39.7%
Northwave 2016 $751 $1,263 40.5% OCR Land Bid Prices for ECs
Bidprice
Date Project Location $psfppr
Parc Life 2016 $780 $1,263 38.2% Awarded
Piermont Grand
7-Mar-18 (EC) Sumang Walk $583
Treasure Crest 2016 $748 $1,263 40.8%
CanberraLink
28-Jun-18 Canberra Link $558
(EC)
Sol Acres 2015 $788 $1,169 32.6%
10-Aug-18 Anchorvale Anchorvale Crescent $576
Crescent(EC)
Source: PropNex Research, URA Realis data retrieved as of June21 Tampines Ave
22-Jan-19 Tampines Ave 10 $578
10 (EC)
Secondly, ECs are sold at a competitive price and has an Average $576 psf ppr
edge over private condominiums in terms of pricing. They Source: PropNex Research, URA, HDB
* Aver age PSF PPR is based on total
transa
cted price / total GFA of all sites
are typically sold at a discount, compared to private
condominiums. Based on our analysis, comparing against a
private property in the OCR segment, it can be seen that the
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EC sites are bidded at a lower price,
prices of ECs have been lower as compared to other private hence, developers are able to pass on
their savings in terms of alower price for
properties over the years.The primary reason for the prices EC projects.
of ECs to be lower as compared to other private properties,
is due to developers being able to enjoy lower land bidcosts. Value
EC is a valuable asset to hold, as over time it
appreciates in value. One example, would be the EC,
Bishan Loft. The median unit price during the launch
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ECs are generally comparable in quality year was $418 psf. Based on the URA Realis data
and is sold at a discounted price, on
retrieved, its median resale unit price in 2019, was
average at 36.8% discount, ascompared
to other private condominiums. $1,154 psf, an 176.1% increase since its launch year.
Based on our analysis of the sites awarded from 2018 to first
half of 2019 in the OCR segment, we can observe the
juxtaposition in land bid prices for private property sites and Source: PropNex Research, URA Realis data retrieved as of June 21,2019
for EC sites. Using the average land bid prices as a gauge,
EC sites benefit from a 32.1% lower cost as compared to
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Another upside of purchasing anEC
is, Buyers are able to enjoy capital
other private property sites in the OCR segment.
appreciation over time.
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Disclaimer:
While every reasonable cause is taken to ensure the accuracy of information printed or presented here, no responsibility can be accepted for any loss of inconvenience caused by any error or omission.
The ideas, suggestions, general principles, examples and other information presented here are for reference and educational purposes only. This publication is not in anyway intended to give investment
advise or recommendations to buy, sell or lease properties or any form of property investment. PropNex shall have no liability for any loss or expense whatsoever, relating to investment decisions made by
the audience. All copyrights reserved.
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