Khaw to developers: Don't forget intent of ECs

[reporter2]

http://www.straitstimes.com/archive/...t-ecs-20121124

Khaw to developers: Don't forget intent of ECs

Published on Nov 24, 2012

By Esther Teo Property Reporter


DEVELOPERS have been warned not to forget the fundamental premise of an executive condominium (EC) even as they fall over themselves to offer luxurious finishings to attract buyers.

National Development Minister Khaw Boon Wan said they should remember the policy intent of ECs: to help Singaporean families earning $12,000 or less a month buy a condo for a price under the market rate.

In a blog post yesterday, Mr Khaw reminded developers that land prices for ECs are lower than prices of private condo land. This is done through the zoning and tendering out of the land earmarked for EC projects.

Mr Khaw's post came on the back of reports about a string of ECs sold at sky-high prices. A 2,845 sq ft penthouse at Heron Bay in Upper Serangoon Road, for instance, was sold for $1.77 million last month. And the upcoming CityLife @ Tampines will offer a 4,349 sq ft "presidential penthouse suite" that is likely to cost more than $2 million.

"I expect the developer to have done his calculations, to ensure that the unit will be affordable for the targeted EC applicants," Mr Khaw said.

While EC developers have flexibility in designing and pricing their units, they "must be mindful that flexibility must be exercised in keeping with the intent and spirit of the EC policy", he warned.

Industry players say there has been growing demand for larger units in general. Instead of a 4,000 sq ft unit for one family, PropNex chief executive Mohamed Ismail said the space could be used to house two to three families in typical-sized units.

"The penthouse unit could be a marketing tool to sell the pre-mium lifestyle of the EC and to grab attention but it does not benefit the majority," he added.

"If developers don't take into account the intended objectives, the authorities might even come up with certain guidelines."

Mr Zak Hashim, 48, who runs a consultancy business, is looking for a penthouse unit at an EC with four or five rooms. He lives in an executive HDB flat in Hougang with his wife, three children and a maid. "We are looking for a larger penthouse unit so each of our kids can get a room each. We can't afford landed so a large EC unit is more affordable. After we sell our flat, together with our CPF savings, the loan we will take will probably be less than $500,000 and so it's affordable," he said.

EC applicants must meet the household income criterion of no more than $12,000 a month and must not have bought two subsidised flats before.

[email protected]

[reporter2]

http://www.businesstimes.com.sg/arch...-khaw-20121124

Published November 24, 2012

EC developers should heed policy's spirit: Khaw

Some see his remarks as being a precursor to measures to rein in EC prices

By Mindy Tan


NATIONAL Development Minister Khaw Boon Wan has said that developers of executive condominiums (ECs) exercising the flexibility in pricing and design that they have been given should stay within the spirit of the concept of this class of housing.

Issuing the reminder through a blog post in "Housing Matters", he wrote that ECs were conceptualised for Singaporean families earning within $12,000 a month, to enable them to own condominium-style homes at below the market rate.

Noting news reports that an EC penthouse had recently been sold for $1.77 million, and that another penthouse would soon hit the market, he wrote: "I expect the developer to have done his calculations to ensure that the unit will be affordable for the targeted EC applicants. We provide EC developers with much flexibility, but they must be mindful that this flexibility must be exercised in keeping with the intent and spirit of the EC policy."

He also wrote that the government zones and tenders out plots specifically for ECs, enabling developers to acquire these plots for less than land meant for private condominiums, to build ECs for those who can afford to buy more than an HDB flat, but still find private property unaffordable. Some in the industry read his blog comments as being a precursor to some government measures to rein in EC prices.

DTZ's head of Asia-Pacific research Chua Chor Hoon said that if the minister blogged about the issue, it meant the government was concerned, and probably monitoring the EC market. "If developers continue to develop big units with a large price tag that's not in alignment with the intention of ECs, then there is a high possibility of some measures being introduced."

That being said, the bulk of units are still within the price range of EC buyers, said Jones Lang LaSalle's national director of research and consultancy, Ong Teck Hui. "According to caveats lodged this year to date for new EC sales, 91 per cent of units sold were below $1 million. At this juncture, high-quantum EC sales are still a minority, but the authorities are trying to nip the issue in the bud."

The $1.77 million unit ($624 per sq ft) that Mr Khaw was referring to is in Heron Bay in Upper Serangoon; a week before it was sold, a double-storey penthouse in Yishun's 1 Canberra went for $1.61 million ($595 psf).

A 4,349 sq ft "presidential penthouse suite" in the upcoming project, CityLife @ Tampines, is expected to trump this. Billed as "Singapore's first luxury hotel-style" EC, the project by Amara Holdings, Kay Lim Holdings and SingXpress Land is sited next to The Tampines Trilliant.

A report by Savills last month said that more than 300 new ECs have been transacted above $1 million since the segment was relaunched in late 2010. More than half were sold this year, nearly 100 units in Q2 alone.

Launch prices have also been higher this year than last year, said DTZ's Ms Chua. Indeed, as developers continue to bid for EC sites at higher prices, they are likely to price their projects higher, she said.

R'ST director Ong Kah Seng, looking ahead, said that the government may moderate the supply of EC sites through the Government Land Sales programme. He said: "The intensifying competition seen among recent EC projects could stem from the pool of eligible buyers being increasingly exhausted. This means the reintroduction of the EC scheme has mostly met its objectives of providing value-options for buyers who have found difficulty in affording private homes."

[kane]

Just set a cap on the size. 1500sqft for a regular floor unit. 2000sqft for ground floor and penthouse units. Nothing should exceed these 2 guidelines.