Interest in executive condo has surged, with buyers drawn by potential price gains and fancy designs that rival those at private condos.
The record prices paid for new launches have also sparked controversy over whether buyers of expensive ECs should be entitled to Housing Board (HDB) grants.
“It’s almost a given that if you buy an EC today and wait 10 years, you could make a quarter of a million dollars in profit,” said Prop-Nex chief executive Mohamed Ismail.
Introduced in 1995, ECs were created to meet the aspirations of the so-called “sandwich class” who might not qualify for public housing but find private property beyond their reach.
Units at new EC launches are typically 20 to 25 per cent cheaper than comparable 99-year leasehold private condominiums, due to Housing Board restrictions on ECs such as a household monthly income cap of $14,000.
They can be sold to Singaporeans and permanent residents (PRs) after five years. After 10 years, they can also be sold to foreigners.
This is unlike HDB flats, which cannot be sold to foreigners who are not permanent residents for their entire tenure.
The price gap between ECs and private condos, however, is narrowing, analysts said, meaning that the investment gains from buying an EC could be smaller in future.
For chief technical officer Kim Kerh Chay and his family, price was the deciding factor when they bought their 2,400 sq ft penthouse at Windermere in Choa Chu Kang in mid-2010.
Mr Kim, 55, lives there with his 51-year-old wife, who is a homemaker, and his two sons.
His elder son Lawrence Kim, a 30-year-old entrepreneur, told The Sunday Times: “It all boils down to price… After 10 years, it becomes a private condo, there’s no difference. The facilities are also the same.”
The family bought the unit on resale for $1.14 million. The price, Mr Lawrence Kim said, was roughly what its previous owner paid for it at launch.
Since then, its value has shot up around 40 per cent to between $1.55 million and $1.65 million. The family aims to sell it for $1.8 million and then upgrade to a semi-detached house in Bukit Timah.
Analysts said investors see ECs as a value buy especially if the project has high-end features, since the price gap between ECs and private condominiums narrows as an EC approaches its 10-year mark, when it becomes fully privatised.
The most expensive EC is Bishan Loft, which was completed in 2003. Prices have climbed from between $379 and $491 per sq ft (psf) at launch, to $1,109 psf on average now.
Other projects that have fared well since launch include Whitewater in Pasir Ris. Prices were $313 to $423 psf at launch, but are now $825 psf on average.
However, prices have not risen as much at some other projects. At Yew Mei Green in Choa Chu Kang, the current average price of $717 psf is lower than the higher end of the price range at launch, which was $308 to $844 psf.
ECs have made a strong comeback since 2010 after a five-year absence. Newer projects such as Prive in Punggol, Belysa in Pasir Ris and Esparina Residences in Buangkok have sold out or have only one or two units unsold.
Recent launch prices of new ECs have begun to gain ground on mass market condo prices. “Over the past year, the median price gap between a new EC and a condominium has closed, while the median price gap between a new EC and a HDB resale flat has widened,” a DTZ report said.
DTZ head of Asia-Pacific research Chua Chor Hoon noted: “If EC prices continued to rise, potential EC buyers might switch to the HDB resale market or the private housing market, depending on their budget.”
The location and convenience of some ECs means some buyers are likely to stay put, which cuts resale supply.
Mr Tan Chinlee, who lives in a three-bedroom unit at Eastvale in Pasir Ris with his wife and son, told The Sunday Times last Friday that he has no intention of selling.
Noting that it would be difficult to find another EC of the same size and at an equally good location for a reasonable price, he said he chose Eastvale for its proximity to Pasir Ris MRT and the beach, and facilities such as a gym.
The 56-year-old, who is self-employed, bought his unit for about $500,000 at its launch in 2000. He estimates that it is worth $800,000 now.