Executive condominiums are fast becoming the trend in Singapore’s long-term investment real estate domain. OrangeTee has come up with a study of comparisons and similarities between executive condominiums (EC) and private condos, and have strong evidence to prove that EC’s are now becoming a favoured long-term investment among real estate players. There are however, regulations that need to be adhered to when opting for an EC buy.
EC or Condo for Investing
First, when buying, the price of a private condo is almost 20-30% higher than an EC, which makes EC a more favourable option, not just for investors, but also for middle class Singaporean residents. Second, executive condos are just as lavish and comfortable as a private condo with all the luxuries and amenities. Also, after the minimum period of occupation (MOP), which is five years, the EC can be sold to any Singaporean resident, or rented out. Moreover, after a decade of owning an executive condo, it becomes fully privatized, and can be sold to anyone on the free market. At this time, the price difference between a private condo and an EC falls to a mere 5-9%.
Mature Estates Such as Hougang or Yio Chu Kang a better Investment Option
However, there are some drawbacks with the ownership of an EC. Firstly, all executive condos have a 99-year lease, which makes it a little less-favourable buy for those who want a home for the coming generations. Also, the rules and regulations which stipulate the buying of an EC are exclusive to Singaporean residents. To elaborate, one cannot buy an executive condominium if one’s salary exceeds SGD 14,000, cannot be a property holder in Singapore for the previous 30 months, and there are other eligibility conditions regarding family. Investing in an EC in a mature town maybe a better option as it will have more upside potential and profit. There is an upcoming EC by Hoi Hup Realty located in the Yio Chu Kang Road and Hougang.
Out of the 21 privatized ECs surveyed by OrangeTee, 13 suffered losses after five years, owing to the fact that they were bought prior to the Asian financial crisis, and the remaining eight were profitable. However, all 21 became profitable after a decade.
Investing in Executive Condominium for Profit
However, Celine Chan, OrangeTee’s research analyst and co-author of the study and report believes that EC’s are more of an affordable option, upwards from public housing, and are being bought mostly by middle class aspirants for their own occupation and residence.
Summing it up, executive condos provide a way of moving up the social ladder to comfort and affluence via government subsidies and schemes for middle class Singapore citizens; however, there are pitfalls for real estate investors trying to make a quick buck. Hence a long-term, decade-long, investment seems a plausible way for real estate dealers to make a profit from the ownership of an executive condominium.