“The [Executive Condominium] scheme has given Singaporeans a chance to buy a luxury “Lexus” at [Toyota] “Corolla” prices,” this was quoted by the then Minister of National Development, Mr Khaw Boon Wah, in the parliament.

Executive Condominiums (ECs) have all the facilities similar to a private condominium and they also have autonomy of the management estate via the Management Corporation Strata Title (MCST).

While there are strict eligibility criteria and differences in the computation of the loan-to-value when purchasing a new launch EC, these restrictions will be lifted after the development reaches its 5-year minimum occupation period (MOP). Note that foreign buyers are only able to purchase ECs after 10 years.

As a 3-bedder EC owner myself (I bought it in 2017), it is of my interest to utilise SRI’s own propriety digital tool, Big Data to analyse the market and to evaluate my own options moving forward.

I examined the sales transactions that occurred for the past 1 year (July 2021 to July 2022) and out of the top 5 projects by volume (see Chart 1), three of them are ECs. Barring a few outliers, I’m surprised to find that the resale price of most ECs that attained the 5-year MOP and have not reached the 10-year fully privatisation mark, are still very much on par with other full-fledged private condominiums in terms of price PSF.

Chart 1

Drilling into the transactions for The Topiary and Ecopolitan (see Charts 2 and 3), both of which have reached their 5-year MOP, I saw gains of above $700,000 or 50% from the purchase price for some owners.

 

Chart 2

Chart 3

These two ECs were launched during 2012-2013 and when I compared the trend line of new sales ECs with the new sale for private condominiums, I noticed that there was a good gap between them as compared to previous years, making ECs more affordable. This gap is again observed today in 2022 (see Chart 4). Will history repeat itself for new EC owners to make a profit again after MOP?

Chart 4

One of the other options that I was examining was looking at a bigger resale EC as my family grew from just 2 of us to 5, including my helper. It is also in my interest to examine if it might be worthwhile, after all, the biggest plus for a resale EC is that buyers are not subjected to its eligibility criteria, its long construction waits, and eventual MOP (although, yes, perhaps I would have to contribute to the first-owners pot of gold since they got it at a more affordable price).

Chart 5

Looking at the trend line of a resale EC against a new sale EC (see chart 5), while they were previously trending very closely with each other, there are currently noticeable gaps in terms of their price per square foot. This would mean that there could still be potential for capital appreciation for a resale EC to eventually match the price of new launch EC condominiums in its vicinity.

Another key takeaway from this chart is that there is a significant drop in the volume of new sale ECs in the market from 2018. Following the trend line for a new sale EC (orange) from 2011-2017 (except 2014), while there have been huge volumes of ECs transacted, prices only started to increase from 2018 as transaction volume dipped, conversely driving up EC prices for both the resale and new sale sector. With a decline in supply for ECs, we can expect its pricing to continue to increase should the demand for it remain strong.

However, do note that new sale ECs will have 2-3 years of construction time along with a 5 years MOP period before they will be available in the resale market (except to foreign buyers) without restrictions.

Hence, there are pros and cons to both a resale and new sale EC, but it may be worth your while if you are looking to optimise the capital appreciation in your property.

Having said that, it is important to align your family goals and have a clear understanding of the trade-off, risks and financial commitments involved before making any property-related decisions. After all, the property is one of the largest ticket items by quantum that one will purchase. As for me, I will continue to monitor the trends as I count down to the end of my 5-year MOP for my EC.

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This article is written by Derek Ng and all graphic representations are powered by SRI’s propriety analytical tool – Big Data.