Executive condo prices see new highs

Bullish sentiment has led to aggressive bidding by developers, not just for 99-year leasehold government sites for private condominium development but executive condos (EC) as well. This was most evident in the last two tenders of EC sites, which achieved record prices in terms of land bids.

Earlier this month, a joint venture between Frasers Centrepoint Ltd and Lum Chang Building Contractors beat 10 others for a 19,000 sq m (204,516 sq ft) site in Sengkang at Compassvale Bow with a bid price of $193 million or $315 psf per plot ratio (ppr). The site, next to the Buangkok MRT station, can be developed into a 520-unit EC project. Based on the bid price, property consultant CB Richard Ellis (CBRE) estimates the developer’s breakeven price to be around $600 psf and selling price to be in the $650 to $680 psf range.

On another EC site in Yishun Avenue 3, MCC Land, a unit of Chinese state-owned company Metallurgical Corp of China (MCC Group), topped nine others with a bid of $127.8 million or $281 psf ppr. The 15,074 sq m (162,257 sq ft) plot can be developed into a 400-unit EC project with mainly two-, three- and four-bedroom apartments, which could be launched later this year. The breakeven price for the developer is said to be $500 to $550 psf.

Meanwhile, in February, City Developments Ltd beat 10 others to win a condo development site at Sengkang West Avenue/Fernvale Link. The $200.5 million bid worked out to $365 psf ppr. The breakeven price for the project is expected to be $650 to $700 psf, with the selling price pegged at $750 to $800 psf, according to CBRE estimates. This is the first private condo project in the Sengkang West area. The site is adjacent to Sungei Punggol with immediate access to the Layar LRT station.

Such bid prices are also having an impact on the secondary-market transaction prices of ECs in the Sengkang area. In the week of Feb 23 to March 2, there were two transactions at the 368-unit Park Green EC developed by NTUC Choice Homes and completed in 2005. According to EC rules, which are in line with HDB rules, homeowners can only sell their units after a minimum occupation period of five years, after which the units can only be sold to Singaporeans and Permanent Residents. Only after 10 years can ECs be traded like a private condo and be open to all buyers. ECs were introduced in 1995 to appeal to the “sandwich class” — those whose household income exceeds the HDB ceiling of $8,000 a month and yet are not able to make that leap into private condo. Hence, the household income ceiling for first-time EC buyers is $10,000 a month.

At Park Green, a 12th floor, 1,346 sq ft apartment was sold for $780,000 or $580 psf. The previous owner purchased the unit in July 2003 for $516,904 or $384 psf, hence enjoying a 51% capital gain from the sale. The other trabsaction was for a seventh floor, 1,356 sq ft apartment that was sold for $780,000 ($575 psf). The seller bought the apartment in October 2002 for $523,892 ($386 psf), hence seeing a capital gain of 49% in just under eight years.

With property prices soaring, ECs are once again gaining popularity among the sandwich class. Another EC that saw a spate of transactions was the 492-unit Woodsvale, CapitaLand’s 99-year leasehold development completed in 2001.

Located on Woodlands Drive 72, the EC is one of the few high-rise apartment blocks in the area, near the Singapore American School, that feature relatively large three-bedroom units measuring 1,227 to 1,625 sq ft and maisonettes from 2,217 to 2,626 sq ft.

One of the units that changed hands recently was a 1,281 sq ft three-bedroom apartment on the sixth floor of Block 15 that was sold for $643,000 or $502 psf. The seller bought the unit for $454,000 ($354 psf) in June 2001, hence seeing a 42% capital gain over the last eight years. A fourth-floor, 1,313 sq ft apartment in block 17 was sold for $645,000 ($491 psf). The seller paid $513,480 ($391 psf) for the unit in March 2000 and saw a 26% capital appreciation over that time.

A third transaction was for a ground-floor, 1,496 sq ft unit that was sold for $665,000 ($444 psf). The three-bedroom apartment has changed hands twice over the past decade, the last transaction being in February 2008, when it was sold for $600,000 ($401 psf). The first owner bought the unit at $481,500 ($322 psf) in January 1999.

The highest transacted price for an apartment at Woodsvale was set in February when a three-bedroom, 1,227 sq ft, 13th-floor unit was sold for $650,000 or $530 psf. The seller bought it for $391,500 ($319 psf) in November 2006, hence seeing a capital appreciation of 66% in just three years. The very first owner paid just $488,100 ($398 psf) for the unit in January 1999.

As prices of HDB flats in the resale market and private condos continue to soar, it is not surprising that EC prices are heading north and hitting new highs.

S0urce : The Edge – 22 March 2010