Analysis Is An Executive Condo Still Worth It: An Analysis of 53 ECs

10 min read

Just 2 years ago in 2018, a record was broken in the realm of executive condos in Singapore. 

There was a big commotion about this Sumang Walk purchase – and with good reason too. 

It broke the record for the most expensive land purchase for an executive condo at $509 million. 

While also registering the second-highest number of bids for the land at 17 bids (not far off from the record 19 bids).

Developer	Bid
CDL	$509,370,000
Qingjian Realty	$486,000,000
Yanlord and Solibuild	$450,000,888
Hoi Hup and Sunway	$446,600,000
Sing Development, FEC and Changi	$431,688,338
Evia Real Estate & Gamuda	$426,368,889
MCC Land	$413,700,000
UED Residential, TSKY and ZACD	$411,888,333
Frasers Property	$409,000,000
Nanshan Group and Harmony Flourishing	$400,829,766
GLL C	$397,533,000
Sim Lian Land	$393,900,009
JBE Properties	$393,900,000
Peak Opal	$387,100,000
TTH Development, Santarli Capital Venture Pte Ltd and Kay Lim	$382,682,988
MCL Land	$382,000,000
HB Lombard	$373,808,000

The best part?

All 17 bids surpassed the previous record set in July 2013 for the current Lake Life site. 

Since then, its launch set another record too – it was the first time average prices for an executive condo has crossed the $1,000 psf mark. 

And as of the current time of writing, it has sold a total of 62.3% of its 820 units – which doesn’t sound bad at all – until you find out that it was the only EC launch in 2019. 

You could also say that Piermont Grand EC has been the trendsetter, as subsequent launches Parc Canberra EC and the Ola EC have all joined the $1,000 psf executive condo club since. 

So if you are in the market for an executive condo, you will no doubt be looking at these unprecedented new highs in EC prices and wondering if going for an EC will still make any sense.

Well, that is exactly what we will be exploring today – does buying an EC still represent good value in 2020.

To make this an easy read, I will be looking at some broader themes:

1. The rise in EC prices
2. EC profitability margins
3. Executive condo and private condo price gap
4. EC profits at 5 year and 10 year marks
5. Breaking down all the ECs individually

Let’s get right down to business.

The rise in EC prices

There’s absolutely no doubt that executive condo prices have been rising throughout the years. 

From the first EC launch (Eastvale) in 1999, until today in 2020, launch prices have risen from about $400 psf to its current approximately $1,100 psf.

That represents a 175% increase!

If you were to take a look at recent years, you will, in fact, realise that there has still been an upward trend in prices.

As you can see from the graph, there was an almost doubling in average psf prices from 2008 to 2013. 

This was purely because there were no EC sales in that period as HDB had replaced it with the DBSS scheme (which I think most of us can agree is now officially a failed venture). 

Prices have slowly increased since then from a high $600 plus psf to $800 plus psf in early 2019. 

Even if the increases have been rather moderate given the bummer crop of EC launches we saw in 2016/2017 (hint: it had something to do with market oversupply). 

This, despite a revision upwards in the income ceiling for an EC in 2015 from $12,000 to $14,000. 

And again recently in 2019, when the income ceiling was further raised to $16,000. 

But it’s quite clear that the Government expects these new EC prices to be a new norm, given their decision to increase the ceiling to allow for a bigger range of potential EC buyers. 

Now that we’ve gotten the obvious out of the way, however, the bigger question remains. 

Are developers profiting from this increase in prices?

Let’s take a look.

EC Profitability Margins

Unfortunately, I wasn’t able to obtain any of the figures for 2008 and earlier, but I think this is a good enough indication to judge the profitability of ECs from a developer standpoint. 

Other than the exception of Rivercove EC at a 30% profit margin, the rest of the executive condos have a margin of between 8% to 24%. 

EC Project	Breakeven	Launch Price	Margin
Ola	$976	$1,137	14.16%
Parc Canberra	$954	$1,104	13.59%
Piermont Grand	$938	$1,101	14.80%
Rivercove	$671	$971	30.90%
Hundred Palms Residences	$678	$842	19.48%
iNz Residence	$601	$774	22.35%
Northwave	$581	$746	22.12%
Treasure Crest	$583	$747	21.95%
The Visionaire	$669	$815	17.91%
Sol Acres	$673	$787	14.49%
Parc Life	$630	$785	19.75%
Wandervale	$678	$765	11.37%
The Criterion	$642	$796	19.35%
The Brownstone	$665	$814	18.30%
Westwood Residences	$702	$803	12.58%
Signature At Yishun	$647	$772	16.19%
The Terrace	$671	$812	17.36%
Bellewaters	$642	$817	21.42%
The Vales	$685	$789	13.18%
Bellewoods	$655	$799	18.02%
Lake Life	$745	$872	14.56%
The Amore	$672	$800	16.00%
Sea Horizon	$643	$813	20.91%
Ecopolitan	$622	$792	21.46%
SkyPark Residences	$634	$796	20.35%
Lush Acres	$602	$792	23.99%
Forestville	$627	$729	13.99%
The Topiary	$601	$735	18.23%
Twin Fountains	$609	$743	18.03%
Citylife@Tampines	$692	$796	13.07%
Waterbay	$630	$755	16.56%
Waterwoods	$666	$800	16.75%
Heron Bay	$610	$736	17.12%
1 Canberra	$598	$705	15.18%
Twin Waterfalls	$548	$730	24.93%
The Rainforest	$631	$745	15.30%
The Tampines Trilliant	$715	$781	8.45%
WaterColours	$587	$728	19.37%
Blossom Residences	$572	$685	16.50%
Arc at Tampines	$609	$736	17.26%
RiverParc Residence	$533	$681	21.73%
Belysa	$558	$661	15.58%
Austville Residences	$647	$728	11.13%
The Canopy	$585	$651	10.14%
Esparina Residences	$595	$767	22.43%
Privé	$587	$691	15.05%

You won’t really find extremely high-profit margins in this space (unlike private condos), as it is controlled by the MSR as well as the combined income ceiling, thereby limiting the amount developers can price their units at. 

[convertful id="199445"]

But if you look closer at the recent three executive condos that have broken the $1,000 psf mark, you’ll see that their margins are hovering between 13-14% – which is actually lower than all of the EC launches of 2018/2019. 

So if the developers aren’t making a bigger profit from these sales, what gives?

Well, it’s all about the increasing land prices.

Just as how the Stirling Road GLS land sale was attributed to Chinese developers, you can see from the table above the increased competition for land in Singapore. 

So increased competition = higher land price, which then leads to lower profit margins and hence higher EC prices. 

That leads us to our next question:

Has the price gap between an executive condo and private condo been increasing or decreasing?

Executive Condo and Private Condo Price Gap

Probably the biggest reason why ECs are as popular as they are is that it is essentially a subsidised condo.

If you aren’t aware of the executive condo status, I think most people would not be able to tell between an EC and a mass-market condo today.

Take a look at the Ola EC for example, one might even argue that offerings wise they outperform some private condos out there. 

So because they are sold at a cheaper price, when they are fully privatised, they are expected to make up that price gap – thus making the owner money. 

But do ECs really make up that gap upon their private condo status?

Let’s see from the data. 

To make this a fairer comparison, I wanted to see the price gaps segregated by districts.

You’ll find that all the executive condos in Singapore today are only available in districts 18, 19, 20, 22, 23, 25, 27, and 28. 

Let’s look at the first one – District 18.  

Looking at the graph, there is clearly a price gap between the ECs and the condos.

Note that to make it a more unbiased comparison, I only took the leasehold condos in district 18 to compare.

Yet there was still a price gap – which has widened even more significantly in the past few years.

You could chalk this down to the various new developments in the area, like D’Nest and Coco Palms (just to name a few).

But seeing as the data has been skewed due to the new launches in the area, I had to use a more equitable way of finding out this price gap. 

The best way?

It’s quite a straightforward one – this means I can only compare an EC to private condos with similar characteristics. 

So same lease start date, and similar locations (as much as possible).

Let’s start with Simei Green, which is located in Changi. 

As one of the first executive condos in Singapore, it has been privatised long ago. 

The closest comparison I could find was Eastpoint Green, a condominium that was about a 5-minute drive away. 

It started sales in 1996, just a year before Simei Green, and had 646 units as compared to 602 in Simei Green.

So by all accounts, very similar statistics. 

	Simei Green	Eastpoint Green
Tenure Start	1996	1996
TOP	1999	1998
Units	602	646
Starting PSF	$697	$413.92
2004 MOP Gap	$347.33	$409.96

From the graph, it’s easy to see the gap in the early years because of the subsidised prices for Simei Green. 

But at the 5-year mark in 2004, that gap was closed to a difference of $62.62 average psf. 

Simei Green actually performed better in just the one year in 2016, fell behind in 2017 and since then the gap has been closed to an almost marginal difference. 

Although, it’s safe to say here that the price gap between the EC and the private condominium never actually quite catches up. 

Could we chalk this down to the biased view that most people have – that an EC is seen as an “inferior” alternative to private condominiums?

Well, Bishan Loft would beg to differ.

Let me show you.

	Bishan Loft	Rafflesia
Tenure Start	2000	1997
TOP	2003	2005
Units	384	230
Starting PSF	$421	$708
2012 Gap	$1,060.74	$1,078.44

Again, to make this a fairer comparison to evaluate the performance of the EC, I am only going to be looking at similar comparables in the area. 

So the Rafflesia was the obvious choice given its close proximity and TOP date – although it should be noted in this case that it was the smaller development with lesser units.

You can see that the gap was obvious at the beginning – a $286 psf difference.

Even upon MOP 5 years later, the gap still remained almost the same – with a slight reduction to $264 psf.

However, once Bishan Loft reached full privatisation the difference was almost negligible (a $17.70 psf difference for the year 2012). 

But here’s the most amazing part – Bishan Loft actually went on to outperform the Rafflesia.

In the subsequent years from 2014 to 2016, and most recently in 2020.

Although it must be said, there was just the one transaction in 2020 for Bishan Loft as compared to four transactions at the Rafflesia. 

So what can we conclude from this?

As with many other developments, a lot of it is always based on the timing, location, and demand/supply of the area.

In this case, the timing of the launch of Bishan Loft coincided with the upturn in the property cycle. 

Bishan Loft also enjoys one of, if not the most enviable locations for any executive condo.

It’s walking distance to Junction 8 and Bishan MRT, and obviously Bishan itself is a draw given its convenient location. 

Let’s also not forget Bishan is predominantly an HDB town, so the lower supply of condominiums naturally creates that demand. 

I know that’s been quite a mouthful so far, so let’s recap. 

We all know that there is a price gap between an executive condo and a private condo, there’s no doubt about that.

And while I only showed you District 18, I went through District’s 19, 20, 22, 23, 25, 27, and 28, and it was pretty much the same story as well – that price gap never quite closes completely. 

As a matter of fact, like District 18, some of the other districts have price gaps that have widened considerably the past few years because of newer condos in the area. 

Like our price gap article, this could actually present an opportunity for the ECs to catch up. 

District	Gap
18	28%
19	32%
20	27%
22	38%
23	31%
25	23%
27	20%
28	30%

And even when we move down to comparables, the price gap still remains – with the only current outlier being Bishan loft due to its superior location and combination of other factors. 

So now that we’ve established the EC price gap, let’s move on to the profitability of ECs. 

EC profits at 5 and 10 year mark

To look at the profitability of executive condos at the 5 and 10-year mark (MOP and privatisation respectively), I plotted the actual transactions that happened at both points.

Please note that these are gross profits, I did not take into account stamp duty, taxes etc. 

For those that had transactions at the 10-year mark, all of them were profitable – with The Eden at Tampines and Bishan Loft registering a more than 100% profitability.

Again, Bishan Loft is heads and shoulders above its peers with a 159% profitability. 

You’d also notice here that all these developments have a common factor of the period launched (2003/2004) – the time just before the upturn of the property market. 

On the 5-year MOP front, only 23 of the 36 ECs were profitable, with all of the early developments built in 1999/2000 registering a range of figures between -6% to -25% of losses. 

For some reading this, you might be surprised to learn that not all executive condos are a sure-to-win prospect at MOP.

Once again, this was due to the time it was launched as worldwide events like the 1997 Financial Crisis and the tech bubble burst in 2001 all played a role in the first batch of executive condos.

But the most interesting point to note is this:

While the holding period of 10 years to privatisation can be seen as a huge inflexibility to some, you can also look at the “forced” holding period as a blessing in disguise as 100% of these have made money because of that length of time. 

In the example of Floravale, selling at the 5-year MOP mark would have resulted in a -12% loss, while holding it for a further 5 years would have made a 52% gain instead. 

It is quite a huge difference. 

Now, for our last point of exploration (and quite possibly the part that you’ve been waiting for) – how have all the ECs performed as a whole?

Performance of all Executive Condos

EC Name	Launch Price	Units	Avg psf	Profitable Tnx	Unprofitable Tnx	Avg Profit	Avg Loss
The Terrace	$812	747	$884	2	–	$130,850	–
Bellewaters	$817	651	$808	7	–	$39,791	–
The Vales	$789	517	$919	9	–	$105,658	–
Bellewoods	$799	561	$821	5	1	$65,790	-$1,000
Lake Life	$872	546	$1,100	1	–	$272,500	–
The Amore	$800	378	$819	6	1	$44,500	$0
Sea Horizon	$813	495	$831	4	–	$26,668	–
Ecopolitan	$792	512	$978	2	1	$139,200	-$17,500
SkyPark Residences	$796	506	$806	3	–	$41,833	–
Lush Acres	$792	380	$951	5	–	$150,799	–
Forestville	$729	653	$744	5	1	$60,709	-$1,835
The Topiary	$735	700	$911	19	1	$130,240	-$9,855
Twin Fountains	$743	418	$888	6	–	$52,280	–
Citylife@Tampines	$796	514	$976	3	–	$99,500	–
Waterbay	$755	383	$955	4	–	$116,681	–
Waterwoods	$800	373	$859	2	–	$37,246	–
Heron Bay	$736	394	$922	5	–	$172,200	–
1 Canberra	$705	665	$910	10	–	$144,160	–
Twin Waterfalls	$730	728	$956	15	0	$141,469	–
The Rainforest	$745	466	$965	16	–	$192,203	–
The Tampines Trilliant	$781	670	$1,049	18	1	$237,428	$0
WaterColours	$728	416	$842	18	1	$113,619	-$31,300
Blossom Residences	$685	602	$887	58	–	$172,902	–
Arc at Tampines	$736	574	$932	55	–	$146,155	–
RiverParc Residence	$681	504	$865	52	–	$215,012	–
Belysa	$661	315	$879	59	–	$198,151	–
Austville Residences	$728	540	$881	114	–	$180,571	–
The Canopy	$651	406	$825	66	–	$166,222	–
Esparina Residences	$767	573	$1,027	166	–	$306,453	–
Privé	$691	680	$1,012	174	–	$290,937	–
La Casa	$382	444	$725	270	22	$353,834	-$88,898
The Quintet	$370	459	$747	246	6	$439,056	-$72,219
The Esparis	$393	274	$759	213	5	$343,599	-$36,000
Whitewater	$364	397	$717	287	10	$317,264	-$45,314
Park Green	$388	368	$745	285	7	$354,898	-$108,000
Nuovo	$394	297	$892	226	1	$405,210	-$40,000
Lilydale	$353	318	$639	324	17	$228,548	-$42,895
Bishan Loft	$408	384	$1,170	175	5	$533,614	-$62,000
The Dew	$377	248	$852	132	3	$368,073	-$65,333
The Eden	$428	430	$811	289	8	$277,142	-$27,584
The Floravale	$359	794	$652	490	105	$238,299	-$71,099
Woodsvale	$354	696	$599	550	126	$200,356	-$74,542
Northoaks	$360	720	$585	600	158	$211,580	-$82,299
The Florida	$441	496	$668	317	92	$250,146	-$99,612
The Rivervale	$472	671	$723	321	97	$259,924	-$102,926
Summerdale	$441	432	$693	279	65	$271,439	-$74,693
Yew Mei Green	$427	712	$652	418	151	$235,981	-$89,983
Pinevale	$459	322	$723	161	54	$248,882	-$120,486
Chestervale	$455	396	$635	197	73	$196,736	-$124,956
Windermere	$357	395	$618	176	63	$214,604	-$130,796
Simei Green	$402	602	$602	378	139	$260,617	-$68,376
Westmere	$401	286	$807	96	39	$327,098	-$65,292
Eastvale	$406	312	$679	143	46	$260,477	-$50,987

On average, an EC has about 141 profitable and 42 unprofitable transactions. 

And of that, profitable transactions are $207,342 and losses are -$60,193. 

Here’s what I have observed:

• The ECs making good profits are all from the 2003 – 2006 era. Again, it’s all about the right entry and holding period.
• The ratios of profitable and unprofitable transactions for these ECs are all great – mostly profitable with a few unprofitable outliers every now and then. 
• Executive condos from 2013 onwards started to display a big (negative) price gap from its surrounding comparable leasehold condo neighbours (resale, new sale). 

Truthfully, there aren’t many other points from this table that is conclusive – so you can treat this as a topic of interest.

Final Word

Let’s take a final look at the 3 latest executive condos to be launched as we conclude this article.

EC Name	District	Launch Price	Surrounding condo price	Gap	Gap Margin
Ola	19	$1,137	$ 1,105.25	$32	-2.87%
Parc Canberra	27	$1,104	$ 958.69	$145	-15.16%
Piermont Grand	19	$1,101	$ 1,118.00	$17	1.52%

*Prices as of March 2020

As you can see, the private condo price gap (new sale, resale prices) for District 19 is almost negligible – given the prices that the Ola EC and Piermont Grand EC is launched at.

Parc Canberra has a current margin of 15.16%, and that’s a far cry from some of the numbers that was achieved in the earlier years. 

So to surmise, there are two key takeaways that I would like to leave you with.

The first – the “forced” holding period to complete privatisation is the key reason why executive condos are profitable at that 10-year point – that longer holding period allows more time for a possible uptrend.

The second – it is becoming increasingly obvious that EC developers are looking to play ‘quality catch-up’ with private condos, to try and compensate for the higher prices with an elevated perceived value.

And to be frank, with land costs as high as they are today, it’s hard to imagine the same levels of profitability as before – unless of course, we can anticipate a sudden upcoming boom in the economy (in which case, we would mostly profit either way).

But I think that the perceived notion of ECs will never be able to be shaken off in a consumers mindset – so I don’t expect ECs to ever close that price gap.

So for those who are looking for an executive condo to achieve high profits, please do not take Bishan Loft as an example (not unless there is ever an EC launch in a prime location again).

Looking at historic prices, it is unlikely that ECs to transact at private condos pricing – they will still continue transacting in their own category.

At the end of the day though, the main purpose of an EC is to bridge the gap between private residential and HDBs – and that has been met to a certain extent.

There will always be those who are attracted to new developments and want the condo lifestyle but with a certain level of affordance.

Which is why I believe that either way, there will continue to be demand for ECs down the road (especially if there is a diversity in EC offerings for various demographics).

As for them becoming the next gold rush however, I think today’s conclusion is still a cautionary one.