Demand for executive condominiums expected to remain strong

Demand for executive condominiums expected to remain strong
By May Wong | Posted: 13 October 2010 2127 hrs

SINGAPORE : Demand for executive condominiums (ECs) is expected to remain strong - at least for the next year.

This is despite the lower-than-expected reception to one of the ECs launched last weekend.

Property watchers believe there is still a sizeable group of sandwiched class buyers who are priced out of private apartments.

Crowds thronged the showflats of the first EC to be launched in five years. The Esparina in Sengkang is seeing strong response, with more than 60 per cent of its 573 units sold, since it was launched last Friday.

But Yishun's The Canopy, the other EC launched last weekend, saw a slightly cool response from buyers. There have only been about 240 applications as of 5pm, October 10 for its 406-unit project. Sales will begin on October 16.

About three more ECs in Sengkang and Punggol are expected to be launched within the next nine months.

Ong Teck Hui, executive director of Credo Real Estate, said: "The demand for the ECs will be sustained. But as to how the individual projects will perform will depend on the individual attributes...their proximity to amenities, their proximity to accessibility, LRT stations, MRT stations, individual attributes like views and so forth. So those projects with better attributes are likely to perform better."

Observers expect a total of about 3,000 EC units to be sold within one year.

ECs are similar to private condominiums in terms of facilities and amenities. Buying requirements are also similar to that of new HDB flats. But those buying ECs must have a monthly household income not exceeding S$10,000.

Observers said there is a ready market of key buyers, with some 25,000 newly-weds looking for their first homes. But they also note that prospective buyers can also afford to take their time to shop.

Brandon Lee, an investment analyst at DMG& Partners Research, said: "The take-up rate is going to be moderate about 40 to 60 per cent in the first two weeks or so. That is because right now, buyers have a good problem at hand.

"First of all, there is good supply coming up. The government has pledged very strongly that they are going to come up with 4,000 EC units this year as well as next year. Secondly, I think their selection range has also widened with the fact that the income ceiling for DBSS projects is going to be increased to S$10,000 and thirdly, with the HDB resale prices coming off, first-time home buyers will have another avenue to look at when buying their first homes."

Industry watchers said the prices of private condominiums have not come off that much. That is why the EC market will still continue to do well down the road. Observers said the prices of ECs are about 10 to 20 per cent cheaper than private condominiums. So, the average price for ECs is between S$650 and S$750 per square foot. - CNA/ms