Affordability Drives Popularity of Executive Condominiums (ECs); Demand for New Launches Expected to Stay Strong

Driven by attractive price points and the flexibility of the Deferred Payment Scheme (DPS), executive condominiums (ECs) have seen strong market demand this year. With only one new project slated for launch next year, demand is expected to remain robust.

Altura, the sole EC project launched this year, sold over 60% of its units on its launch day in August. As of late November, take-up had reached nearly 90%, with an average transacted price of $1,475 psf, setting a new benchmark high for new ECs. Among the three ECs launched last year, Copen Grand and Tenet are completely sold out, while North Gaia has seen a comparatively moderate performance, with about 60% of units sold.

ECs not only offer an affordable entry price, but also allow buyers to leverage the Deferred Payment Scheme amidst a high-interest-rate environment. In addition, eligible first-time homebuyers can receive up to $30,000 in CPF Housing Grants. Against the backdrop of tight new EC supply and climbing private home prices, strong buyer interest is only to be expected.

The pricing advantage remains the primary driver behind the popularity of new ECs. Compared to 2019, the price gap between new ECs and new mass-market private condominiums widened from 29% to 46% as of October this year.

Altura is the first EC launched in Bukit Batok since 2001. Apart from its daily conveniences, it is located adjacent to Tengah Town. With the future relocation of Anglo-Chinese School (Primary) to the vicinity, the area has become highly sought after by young families.

Industry Observers: EC Sales Outperform Private Homes This Year; Prices May Continue to Climb

Overall EC transactions, including resale units, outperformed the private residential market this year. In the first 10 months of the year, EC sales volume surged by 109.4% compared to the same period in 2019, markedly higher than the 6% and 0.5% growth recorded by non-landed and landed private homes respectively. Compared to the same period last year, EC sales dipped by 10.1%, though this contraction was milder than the 16% drop seen in non-landed private homes and the 31.8% decline in landed properties.

Looking ahead to next year, the only new EC project in the pipeline is Lumina Grand at Bukit Batok West Avenue 5. Developed by City Developments Limited (CDL), the 512-unit project is expected to launch in the first quarter of next year.

Given that it will be the only new EC launch next year, its competitive pricing advantage is poised to drive strong market demand.

For buyers keen on moving into the Tengah area who missed out on Altura, Lumina Grand presents a compelling choice. In addition, the sizable pool of HDB upgraders in the surrounding estates bodes well for healthy future capital appreciation upon resale.

Developers View ECs as a Safe Haven; Land Bids Reach New Highs

Steady EC sales have led developers to treat the segment as a safe haven, driving recent tender prices for EC land parcels to successive record highs. In October, the Tampines Street 62 (Parcel B) site drew seven bids, eventually awarded to Sim Lian Land and Sim Lian Development at $721 psf per plot ratio (psf ppr), eclipsing the previous benchmark of $703 psf ppr set shortly before by the Plantation Close site in Tengah.

Compared to acquiring private residential land, bidding for EC sites presents lower development risk. Given rising land costs, prices for future new EC launches are expected to head higher. However, because new EC purchases are subject to the Mortgage Servicing Ratio (MSR) cap of 30% of buyers' monthly income, developers will likely remain prudent when setting selling prices.