Category Archives: HDB

Expect to pay more for exec condos

Posted on 14 Mar 2010 | Comments Off on Expect to pay more for exec condos

Executive condominium (EC) prices look set to rise further with the close of two EC tenders at higher-than-expected bids in the past two weeks.

The Sengkang EC site attracted a top bid of $315 per sq ft (psf) of gross floor area, while the Yishun EC site drew a top bid of $281 psf of gross floor area.

Analysts estimated that the winning bidders will have to sell the units at Sengkang for $650 to $700 psf and those in Yishun for $600 to $650 psf.

CBRE Research said the median price of new 99-year leasehold private condo units in similar locations as ECs was just $663 psf as of last month.

However, the latest 99-year condo The Estuary in Yishun sold at some $750 to $800 psf, with more than 500 units snapped up since early this month. It is therefore reasonable to expect that new EC projects may be launched at more than $600 psf, it said.

In the resale market, EC unit prices have risen in line with the market, closing the gap between resale prices of EC and private condo units.

As of last month, resale EC unit prices have reached $557 psf, up 75 per cent from the market bottom in the third quarter of 2006.

The price gap between resale private condo units and resale EC units has narrowed to 11 per cent, from 14 per cent late last year, according to CBRE Research.

This could have a bearing on the gap between new EC units and new private condo units – the gap could become smaller than the historical one of 25 per cent to 35 per cent, said its executive director Li Hiaw Ho.

Said PropNex chief executive Mohamed Ismail: ‘There will still be a gap of around 25 per cent. It is still there, but it may be slightly smaller because land cost has become more competitive.’

This price gap reflects the constraints attached to ECs such as qualifying conditions and the restriction on resale only after the minimum occupation period of five years, experts said.

ECs come with condo facilities but have initial sale restrictions similar to those for public housing. They convert to a private property only after a decade.

They were introduced in 1995 to bridge the gap between public housing and private apartments, aimed at Singaporeans who could afford more than an HDB flat but might find private property out of their reach.

Buyers of new EC units have to meet a gross monthly household income ceiling criterion of $10,000 a month, slightly above the $8,000 income ceiling for a new HDB flat.

Despite the expected higher EC prices, there is likely to be pent-up demand for the new ECs, Mr Ismail and Ngee Ann Polytechnic lecturer Nicholas Mak predicted.

Firstly, there have not been any EC launches since 2005, when La Casa in Woodlands was marketed, said Mr Mak.

Also, prices of 99-year leasehold condo units as well as HDB resale flats have gone up, he pointed out.

‘Those who earn more than $8,000 do not qualify for build-to-order or design, build and sell scheme HDB flats. They would have a greater motivation to apply for ECs,’ said Mr Ismail.

Besides, the higher psf price may not translate to a huge lump sum. ‘Given the two recent EC bids, the developers are likely to offer more smaller units, such that they can sell them at the right prices,’ he said.

‘Developers these days are offering more smaller units. Buyers will have a better lifestyle but they will have to compromise on space.’

Source : Sunday Times – 14 Mar 2010

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New PR limits may hit Indian flat sellers

Posted on 14 Mar 2010 | Comments Off on New PR limits may hit Indian flat sellers

Mr Mohamed Mustafa Shahulhamid has been looking for a resale flat in Little India for his son in the last six months.

So far, his hunt has been fruitless.

‘Many Indian families want to live in Little India. No Indian families are moving out and we cannot buy from the Chinese,’ said the 51-year-old frozen food trader.

Under the Ethnic Integration Policy, the Government has set ratios for ethnic groups in HDB blocks and precincts. This is to prevent enclaves from forming.

In Little India, the quotas for Indians/Others are usually filled.

But Mr Mohamed Mustafa may now get a break as a result of quota changes. On March 5, the quotas for Indians/Others were raised to 12 per cent and 15 per cent for precinct and block respectively, up from 10 per cent and 13 per cent.

The corresponding quotas remain unchanged for the Chinese (84 per cent and 87 per cent) and Malays (22 per cent and 25 per cent).

Is this change a boon for Indian buyers and sellers?

It is unclear at this point, said estate agents, because another quota has also come into play.

On March 5, the HDB also announced quotas for permanent residents (PRs), set at 5 per cent and 8 per cent for precinct and block respectively.

Previously, an Indian seller could also rely on PRs to make up for any shortfall in potential Indian buyers, if the Chinese and Malay quotas had been reached in a block or precinct.

But with the PR quotas, the pool of buyers could become smaller, said Mr R. Subra, managing director of SKV International Property Consultants.

‘The new limits for PRs may nullify any upside from the ethnic quota change,’ he noted.

Already, Indians are selling their homes at a few thousand dollars – or up to 10 per cent – below the average transacted prices of a similar flat type in the same neighbourhood, said Dennis Wee Group agent Jason Sim.

This is true of areas like Sembawang and Woodlands, where the Chinese quotas are maxed out, he said.

Take the case of retiree K. Omar, who had Chinese buyers offering up to $25,000 cash over valuation for his four-room flat in Bukit Ho Swee. But they could not close the deal because the Chinese quota in his block had already been met.

Mr Omar, 65, took a year before he sold the flat at the valuation price of $430,000 last November. The buyers were a Vietnamese couple.

But the revised Indian/Others quotas offer potentially good news for Indians eyeing areas such as Race Course Road.

One reason such places are popular is that they are near temples.

In these districts, Indians have often found it hard to buy a resale flat because the quotas were already filled, and not many Indians or Eurasians wanted to sell their homes in the first place.

Industry experts said the effects of the new changes will be seen only in a couple of months.

For now, the search for a flat continues for Mr Mohamed Mustafa.

‘The raised quota may not help,’ he said, adding that he may consider areas like Toa Payoh, Thomson and Paya Lebar.

Source : Sunday Times – 14 Mar 2010

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