Prices of resale executive condominiums (ECs) rose in tandem with private condos and even surpassed new ECs, said Jones Lang LaSalle (JLL).
ECs were introduced in 1996 catering to buyers who found private homes too expensive. While they were priced affordably compared to private condos, the units came with limitations.
For instance, ECs come with a Minimum Occupation Period (MOP) of five years before they can be sold on the open market. Between the 6th and 10th year, only Singaporeans and permanent residents (PRs) can purchase them, while foreigners can only do so after the 11th year.
After a two-year hiatus, new EC launches resumed in Q4 2010 and prices exceeded those of their resale counterparts due to being new and having a fresh 99-year lease.
But quarterly median prices of resale ECs from that period to Q1 this year surged by 25.7 percent, beating the price growth of new units. Meanwhile, median prices of resale units hit S$778 psf last quarter compared to S$748 psf for new ECs.
Moreover, resale prices of ECs grew in line with those of similar private homes. From Q1 2009 (when the EC sector bottomed following the global downturn) to Q1 this year, median prices of resale ECs jumped by 76.8 percent from S$440 psf to S$778 psf. They even moved past the 72.6 percent gain for resale non-landed 99-year leasehold private homes in the OCR (Outside Central Region) during the same period.
The findings show that resale ECs are a practical alternative to private resale condos and even new ECs because of comparable or better capital appreciation. They also “augur well for the EC market and buyers who will feel even more confident that ECs are reasonable investments to commit to”, noted JLL.
Source : PropGuru – 25 Apr 2013