Property Outlook for Executive Condominiums in the West
There are a few good signs for executive condominiums in the West. The number of contracts signed in the last quarter was up 8% compared to the same quarter last year. Sales in January 2021 were up 50% and coop sales jumped 167% compared to January 2019. In the coming months, the rental market will pick up. While it will continue to be slow until companies ask their employees to return to their offices, it should see a quick turnaround in the next few months.
Resale ECs have private outdoor terraces
Resale ECs are condominiums that are built by private developers and sold at lower prices than private condominiums. In some cases, the price can be further lowered by claiming CPF Housing Grants, which are not available for private properties on the open market. These properties have become a popular choice for many Singaporeans. Since the Design, Build and Sale Scheme (DBSS) was introduced in 2005, the EC market has been booming.
Resale ECs typically have a lower initial purchase price and a higher rental yield. Moreover, the restriction on renting out ECs will be removed within six to ten years, boosting the rental income. Resale ECs are a great long-term investment option, but they are not all created equally. There is considerable variance in the rate of capital appreciation among ECs, so it is important to do some research before purchasing an EC.
Luxury condos are popular in the West
As the demand for luxury condos increases in the West, the price of these units is rising too. In the second quarter of 2013, the median sale price of a luxury condo in Los Angeles reached $966,000, up 9% from the first quarter and 16% from a year earlier. In contrast, the median price of a luxury condo in San Francisco rose 11%, to $2.6 million. This increase is due in part to a lack of supply in the luxury segment, which is expected to be more limited.
While many buyers are attracted to luxury condos for the convenience they offer, more people are also seeking lifestyle-oriented amenities. For example, a luxury building in Miami is offering its members Jetsmarter membership, which entitles them to rides on private planes between major cities and the luxury condo building’s concierge service.
Prices of ECs are lower than private condos
The prices of Executive Condominiums (EC) are generally lower than those of private condos. They range from S$700 psf to S$900 psf, and a two-bedroom EC will cost you around $650,000. In contrast, a three-bedroom private condo can cost you up to S$1.2 million. The main difference between ECs and private condos is that ECs are government-subsidized, so they are cheaper.
Another difference between ECs and private condos is that ECs cater to the sandwich class. These are people who earn above the upper income limits for private condos and HDB flats. In addition, to qualify for ECs, you must be an essential occupant and have no other properties in Singapore or overseas. You also cannot have sold a private condo in the last 30 months.
Buyers must fulfil 5-year MOP before selling
To be eligible for selling executive condominiums in the West, buyers must complete a 5-year Minimum Occupation Period. This period lasts from the day they collect the keys to their HDB flat. During this time, they cannot purchase another HDB flat. This policy is intended to prevent property investors from buying and reselling HDB flats at inflated prices.
A good reason to wait 5 years before selling an EC is to reap the benefits of property market sentiments. Different ECs end MOP in different years. Also, cooling measures and property market performance fluctuate yearly, varying the MOP duration. It is therefore necessary to understand the characteristics of your EC and your financial situation before making the decision to sell it.