http://www.straitstimes.com/archive/...uyers-20140927

Year-long wait over for EC buyers

Sales open after being held back by govt move to moderate bids for sites

Published on Sep 27, 2014 1:10 AM

By Cheryl Ong


BUYERS eager to secure an executive condo (EC) unit will have plenty of options after a hiatus of almost a year.

The pause was caused by a government move in January last year stipulating that developers can put an EC project up for sale only 15 months after buying the land or completing foundation works.

This move was aimed at moderating bids for EC sites in the Government Land Sales programme.

However, observers suggest that the measure has not had any discernible impact on the market, with demand from developers little affected.

The last EC project launched was JBE Holdings' Skypark Residences in Sembawang, which went on the market in September last year.

But today, applications open for Bellewoods, a project n Woodlands developed by Qingjian Realty. The 561-unit project is estimated to go on sale at $750 to $820 per sq ft (psf).

By the end of the year, applications for as many as five EC projects are likely to have begun.

Industry players say the measure might have stalled supply but not changed bidding for sites significantly. Instead, buyers seem to be left with less flexibility.

For one thing, developers have seen their costs go up.

Mr Li Jun, general manager of Qingjian Realty, told The Straits Times that developers will have to factor in additional costs when making projections for land bids.

"We need to wait for 20 months before payments from buyers come in and, in these months, we don't know how the market will change.

"Our financial costs will go up because before I sell units, the project's foundation will already have been built. I will need to invest more money because of this," said Mr Li.

Previously, EC launches could go on sale as early as six months from the date of the developer acquiring the land. Payments from buyers would go towards financing construction which might have just begun at that time.

The changed timeframes could translate into higher prices for ECs, said Mr Li. Despite having a wider variety of projects to pick from, buyers who have waited on the sidelines for so long might not have much choice but to bite the bullet.

However, Mr Vincent Ong, a co-managing partner at Evia Real Estate, said the 15-month waiting period has "had very little impact and effect on us".

His project, the 546-unit Lake Life in Yuan Ching Road, is likely to be priced at between $880 and $890 psf.

Mr Nicholas Mak, research director of SLP International, also noted that the 15-month waiting period is "a long time", during which a buyer might have been given a raise in salary. This might disqualify him from buying an EC unit as the buyer's average gross monthly household income must not exceed $12,000.

Developers also are not able to anticipate buyers' preferences, since construction has to begin before units can be sold. "This is not so responsive to the market."

However, Mr Li and Mr Ong maintain this will not affect their bidding behaviour in future EC land tenders.

While industry players might be watching project sales, the developers said the outlook for the EC market remains optimistic. This is despite competition from more units and cooling measures that have made it tougher for buyers to afford property.

"After almost a year of not having ECs, a lot of pent-up demand has accumulated, and these buyers are waiting for new EC projects," said Mr Li.

Also, the Government has cut the supply of EC land this year, so there is no likelihood of an oversupply, he added.

Mr Mak pointed out that buying demand might just be enough to soak up units this time round.

Buyers, however, could be deterred come the next batch of EC launches, slated for the second quarter of next year. This is because of a new rule that kicked in last December. It stipulates that buyers will have to pay a resale tax if they have previously bought an HDB flat.

"Upgraders make up the bulk of EC buyers, and the Government is also pushing out so many BTO (Build-to-Order) flats to first-time buyers, so buying demand will be diverted from ECs. So subsequent launches might find it tough," he said.

[email protected]