The Opportunity Value In ECs
The executive condo (EC) is a unique hybrid of public and private residential property. It is essentially a HDB property for the first 10 years before it is transitioned to a 100% private property.
Below is the 2004 historical transactions for Park Green EC.
The range of prices on a 1,346 sq feet EC (a 3-BR unit) was between $466,000 to $473,000 back in 2004.
About 13 years later, the transactions of Park Green EC has indicated that prices has almost doubled to between $850,000 to $945,000.
Over a 13 year period, there was almost a 100% gain. When this is coverted to annualized returns, it is about a 4.73% yield.
This means a return that is better than the inflation rate.
What If You Had Chosen to Buy An EA / EM Instead within the same location?
Below are historical transactions for EA/EM units located at 102 Rivervale Walk.
In Oct 2005, a 141 sqm EA (between #11-#15) was transacted at $372,000.
In Dec 2016, a 141 sqm EA (between #13-#15) was transacted at $618,000.
Over an 11 year period, there was almost 100% gain.
The returns are also similarly the same – about 4.72% annual returns.
Why The Comparison between EC and HDB Resale EA/EMs?
The reason why I shared the above data is because there is a lot of people out there who are trying to decide between buying an EC or an EA/EM.
Now if you choose to buy an EC, you will have the ability to sell to a bigger pool of buyers after 10 years – there is no restriction on buying a private property.
If you chose to buy an EA/EM, it will still be a HDB property when you choose to sell. Restrictions will still remain – you can only sell to Singapore citizens. But of course, you also get to enjoy the larger space provided by an EA/EM – when compared to an EC.
Current Situation Now In 2018 And Beyond
Just a few days ago, HDB launched a new tender for an EC at Sumang Walk. This could possibly be the last HDB EC land to be put up for tender in the next couple of years based on confirmed government land sales (GLS).
The tender closes end of January 2018 which will translate to a likely launch date towards the 2nd half of 2019.
Now, if we look at HDB website, there is only ONE upcoming EC development.
Taken from https://www.hdb.gov.sg
My personal opinion? The future supply of ECs is being limited.
For HDB upgraders, the opportunity to benefit from buying an EC is available – BUT you will need to act fast before all units are snapped up.
If you believe that property investment will give you the best returns long term, an EC is the stepping stone to begin your asset progression journey.
However, I have also met buyers who become too focused on the location. As EC choices are becoming more limited, majority decide to forego buying an EC and settled for an EA/EM instead.
I do understand why some buyers believe location is an important factor.
But the truth is, I believe that some of these choices of making location the main reason to buy an EA/EM is actually at the expense of future potential upside.
Is this wrong?
Well everyone is entitled to their own choices. I am merely presenting the facts as and when I encounter on the ground.
If you are open to exploring property options that has a great potential upside, I invite you to contact me for a detailed financial discussion.
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