Singapore Property: Will ECs remain resilient?
- Executive condominium (“EC”) sales momentum quickened in the past two years, signifying strong demand for this hybrid asset class
- While new launches are priced at S$1,300psf, EC prices have risen in tandem with private homes in the OCR region, maintaining a discount of 20%-27%
- Land prices breached S$600psf in 2021 but moderated in the latest land bid
- All eyes on the next two EC launches; Copen Grand and Tenet, for future land price / unit price trends
EC sales momentum quickened in the past two years; take-up rates remained stable initially.
In the past two years (2021-2022), Executive Condominium (“EC”) launches have successfully achieved 50% to 60% sales take up in the first weekend of launch, similar to historical trends, except for the latest EC, North Gaia, launched in Apr22 and recorded on 23% sales take-up. EC’s initial sales take-up now seems to track behind that of private condominium launches that have achieved c.85% in 2022. However, we note that EC launches were sold out within less than 1.5 years compared to historically, which took two years or more to clear the units, implying that developers do de-risk the projects fast within the development stage.
EC prices have risen in tandem with OCR condominium prices. While current and future EC launches prices are expected to head towards the S$1,300 psf in 2022 onwards, up from c.S$1,100-S$1,150 psf for launches in 2021, we note that EC prices have moved in tandem with the rise in private homes in the Outside Central Region (“OCR”) prices. In the past two years, new EC prices have risen c.16%, similar to that of OCR prices (new launches) that increased by c.17%. As such, we note that EC prices discount to OCR has remained relatively stable at the 20% to 27% range, in line with historical trends.
Land prices breached S$600psf in 2021 but moderated in the latest EC land bid.
Land prices of EC sites breached the S$600psf mark in 2021. The two highest recorded EC land prices were Bukit Batok West Avenue 8 at S$662psf and Tampines Street 62 at S$659psf, which were awarded to Qingjian and expected to launch in Nov’22. However, we note that the latest land price moderated lower to S$626psf (-5% vs the previous site), implying that developers are cautious about further pushing the pricing envelope, given higher mortgage rates. That said, the strong sales at Copen Grand (by CDL) will be a catalyst for the stock, given that the group will have more ECs in the pipeline for sale come 2023-2024.