EC Rules Can Be Tweaked: Analyst

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SINGAPORE: The average number of penthouse units in executive condominium (EC) projects has climbed slightly in the past year, according to market watchers.

The sale of a luxury penthouse recently has triggered a debate over the role of ECs.

Some analysts have told Channel NewsAsia that while ECs are still relevant, some rules could be tweaked.

ECs were introduced in 1995 and its objective is to provide alternative housing for households who do not qualify for public housing and are unable to afford private condominiums.

Recently-launched ECs often come with all the trappings of a private residential project. Such features include high quality fittings and even concierge services, but at a 25 per cent discount in terms of prices.

But a penthouse at CityLife@Tampines stole the limelight when it was sold for an eye-catching S$2 million.

Property consultancy Knight Frank said that in 2010 and 2011, on average, penthouses made up about 3 to 5 per cent of an EC development.

This number rose to between 5 and 6 per cent last year.

“Developers have to think of new ways to entice buyers for their projects. One of the ways is to introduce luxurious penthouse units,” said Alice Tan, senior manager of consultancy and research at Knight Frank.

“With this recent hype about the 400-square-metre penthouse unit, which was snapped up within an hour, it demonstrates that people are actually looking for luxurious living.”

According to analysts, ECs still serve their purpose of providing alternative housing for the sandwiched class, but some rules could be fine-tuned.

ECs – a hybrid of private and public housing – come with ownership and resale restrictions. The buyer’s income must not be more than S$12,000 a month.

Currently, the government offers a grant of up to S$30,000 for first-time buyers and does not require those upgrading from a public housing flat to pay a resale levy.

Mohd Ismail, CEO of Propnex suggested that the government could also put out guidelines to limit the size and number of large units within an EC project.

For example, he suggested that a penthouse unit should not be larger than 2,000 square feet and larger units of between 1,200 square feet and 1,500 square feet should not constitute more than 15 per cent of the development.

Meanwhile, some analysts say the trend of developing large EC units are not very different now as compared to the 90s.

Alan Cheong, director of research and consultancy at Savills said the number of sale transactions for EC units over 2000 square feet remain quite similar at over two per cent on average, and the ongoing debate could be a result of rising property prices.

“All the while they had large units in ECs, people hardly made any noise until now,” said Mr Cheong. “This thing is coming to haunt everyone because property prices are at an elevated level, everyone wants to have the cake and eat it and profit from it.”

The government is expected to roll out more sites for EC development this year.

According to analysts, the projects will attract strong interest from developers who will continue to offer attractive EC units, comparable to those in the private condominiums.

The National Development Ministry said it is watching developments in the EC market closely and will consider further measures if needed.
courtesy: channelnewsasia