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154th Psycho U to Buy EC Now!

makapaaa

Alfrescian (Inf)
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<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Nov 23, 2008
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</TR><!-- headline one : start --><TR>Good time to buy an exec condo?
</TR><!-- headline one : end --><TR>For those on a tight budget, EC units are an option to private flats </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Joyce Teo, Property Correspondent
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A showflat in Bishan Loft, a popular executive condo. A unit there was sold for $940,000 last month. But not all EC units can command that price. -- ST FILE PHOTO
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An executive condominium (EC) unit in Bishan was sold for a hefty $940,000 to a local buyer late last month.
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COMPLETED EXECUTIVE CONDOS
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</TD></TR></TBODY></TABLE>At $699 per sq ft (psf), the price of the 99-year leasehold 1,346 sq ft unit was comparable to that of some private apartments.
'The buyer, a permanent resident, bought it after the Lehman Brothers collapse. She likes the location and the view from the high-floor unit,' said ERA agent Jacq Chong.
Ms Chong, who has brokered nine Bishan Loft deals at above $900,000 each since September, said buyers like the central location. The EC is within walking distance of Bishan MRT station.
ECs come with condo facilities but have sale restrictions similar to those for public housing. They were introduced in 1995 to bridge the gap between public housing and private apartments. The apartments are aimed at Singaporeans who can afford more than an HDB flat but may find private property out of their reach. New EC units can be bought only by households earning not more than $10,000 a month.
The Bishan Loft sellers who secured those healthy deals were lucky, as such transactions are no longer possible.
'Certainly, ECs are not crisis-proof,' said PropNex chief executive Mohamed Ismail, adding that EC unit prices could easily be affected by the downturn.
Indeed, two units at Bishan Loft were transacted in the past fortnight at $590 psf and $620 psf, said Ms Chong. 'Location is very important. Although prices at Bishan Loft have come down, its value should not be affected as much as the other ECs.'
Still, this would be bad news for sellers - but good news for buyers who might want to start looking and planning. Those with a smaller budget would be glad to know that not all ECs command the same prices as Bishan Loft.
There are 23 completed ECs in Singapore. Most are in outlying areas like Choa Chu Kang and Woodlands, which means they would command much lower prices.
'Buyers can consider an EC unit instead of an HDB flat if they can afford it. EC units may have more potential for capital appreciation as they are renovated and have condo facilities,' said HSR Property Group executive director Eric Cheng.
DTZ Research senior director Chua Chor Hoon added: 'For those who need to buy now, ECs are a good choice if they do not want to overstretch themselves with a private condo.'
By renting them out, they could get a yield of about 4 per cent, similar to that for a 99-year leasehold private condo, said Knight Frank's director of research and consultancy Nicholas Mak.
Like HDB flats, EC units are subject to a minimum occupation period of five years. This means that they cannot be sold within five years. They also cannot be leased out as a whole unit during that period.
After five years, they can be sold, but only to Singaporeans and permanent residents. They become private property after 10 years, when they can also be sold to foreigners.
Prices of EC apartments that are 10 years old and above could be about 5 to 8 per cent higher than newer EC units, said PropNex's Mr Mohamed Ismail.
Before an EC unit is 10 years old, its market is limited so sellers will not be able to raise prices significantly, said Mr Cheng.
'Some sellers may want to wait for higher prices if their EC unit is already nine years old so the best time to buy is when it is between five and eight years old.'
There has been a rise this year in the number of buyers of EC units as HDB resale flat valuations went up a lot, he said.
But HDB resale prices are expected to fall. Although EC prices may also fall, there is a positive side in that they may rise once the ECs reach 10 years of age.
Still, Mr Mak cautioned that the gains may be insignificant and advised buyers to get an EC unit with a view of living in it in the longer term. He said capital gains after privatisation will not be big as the EC market tends to be limited to Singaporeans and permanent residents.
'They are mostly HDB upgraders who are price-sensitive.'
Non-resident foreigners typically prefer districts 9, 10 and 11 and not the suburban areas where most ECs are located, he said. 'EC prices also tend to be a bit of a laggard in a period of price appreciation.'
Buyers should also note that an EC would need more maintenance by the time it is 10 years old. This extra investment to maintain the property may cancel out the possible gains, he added.
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Additional reporting by Elizabeth Wilmot
 
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