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Property Herald: Sales of Exec Condo are Falling Despite Favourable Conditions


Sales of Exec Condo are Falling
Sales of Exec Condo are Falling Despite Favorable Conditions

Introduction

 

An Executive Condominium (EC) is a semi-private, hybrid non-landed housing which is typically cheaper than a private condominium. In exchange for the lower prices, EC buyers must abide by certain restrictions which are similar to those of HDB BTO flats, such as a 5-year minimum occupation period (MOP) before the owners can sell or rent out the units.

 

Among all the different types of private and semi-private residential properties, in the past few years, ECs have enjoyed strong demand from homebuyers due to their limited supply and government subsidies. As a result of government subsidies and housing grants, EC are usually cheaper than comparable 99-year mass-market condominiums, which contributes to their popularity.

 

Take-up rate is falling for EC launches

 

However, the take-up rate of the four most recent EC project launches has been slipping gradually. Copen Grand EC at Tengah Garden Walk was launched in October 2022. Seventy-three percent of the 639 units was sold in the first weekend of its launch.

 

The latest EC project to be launched is the 512-unit Lumina Grand. It has a few factors in its favour. Firstly, it is likely to be the only EC project to be launched this year. The next EC project to be launched is the 495-unit development located at Plantation Close. Although the Plantation Close EC could be launched after 10 December 2024, the developer is likely to avoid releasing it during the year-end lull period.

 

Secondly, the number of launched and unsold EC units has declined to only 288 units at the end of 2023. With such as low stock of available EC units and no other EC to be launched this year, Lumina Grand has few competitors.

 

Table 1: Recent Executive Condominium launches

Name of Exec Condo

Location

Launch Date

Total Units

% of total units sold during launch

Average launch price ($psf)

Copen Grand (EC)

Tengah Garden Walk

Oct-22

639

73.0%

$1,300

Tenet (EC)

Tampines St 62

Dec-22

618

72.0%

$1,360

Altura (Exec Condo)

Bukit Batok West Avenue 8

5-Aug-23

360

61.1%

$1,433

Lumina Grand (EC)

Bukit Batok West Avenue 5

27-Jan-24

512

52.3%

$1,464

Source: Mogul.sg Research, URA

 

Despite such favourable conditions, the take-up rate of Lumina Grand is the lowest among the four EC projects launched in the past fifteen months. One key reason is the rising prices of new EC units. The average price of Copen Grand was $1,300 psf, while the average price of Lumina Grand is 12.6% higher, at $1,464 psf after the “early-bird” discount.

 

The reason for the falling take-up rate

 

Over the same period, the non-landed residential property price index had increased 6.9%, slower than the 12.6% price hike of new EC launches. Hence, the price increase of new EC units has outpaced the prices of the rest of the condominium market.



Although EC are still popular, the housing budgets of homebuyers are limited. Executive Condominiums were created to meet the housing needs of the so-called “sandwich” class of buyers. However, if the sandwich is squeezed too hard, it will not be palatable.

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