Government to ramp up flat supply for middle-income home buyers

SINGAPORE – The executive condominium (EC) market looks set to stir when new projects are launched over the next three to six months. According to property consultancy CB Richard Ellis, ECs are making a comeback after a hiatus of five years as the Government steps in to ramp up flat supply for middle-income home buyers.

Four new EC projects in Compassvale Bow, Punggol Field, Buangkok and Yishun – yielding some 1,400 units – will be launched in the next three to six months.

These sites were awarded in the first half of this year. The Government will also be selling another five EC sites later in the year – at Jurong West, Punggol Drive, Pasir Ris, Tampines and Segar Road – which are expected to yield about another 2,600 units.

The last EC launched was La Casa in Woodlands in 2005, which was completed in early 2008.

CBRE said the comparatively cheaper pricing of ECs is expected to attract a large number of HDB upgraders.

Executive director of CBRE Research Li Hiaw Ho said assuming the historical 30 per cent gap between private suburban homes and new ECs, the median prices of new ECs are likely to stay around $650 to $750 per square foot (psf).

The median price for private suburban homes as of the second quarter stood at $824 psf.

Ms Tay Huey Ying, director for Research and Advisory at Colliers International, expects prices for ECs to rise moderately. “It will still fall below private units in terms of absolute price per square foot simply because there are conditions attached,” she said.

For example, foreigners are not allowed to buy ECs. On top of that, those whose monthly household income exceed $10,000 cannot buy ECs.

Mr Li added that the prices of ECs will match those of comparable private apartments in the same locations after five years, as they will be treated as private properties.

Currently, the non-landed private home market is attracting a lower share of HDB upgraders compared to last year with only 36.1 per cent of them making new home purchases in the second quarter.

At its peak in the first quarter last year, the proportion of HDB upgraders reached 63.6 per cent but it has steadily dipped below the 10-year average of 44 per cent.

Mr Li said with the steep rise in prices of new private homes, more HDB upgraders face a bigger burden of servicing huge mortgage loans.

“The lowering of the housing loan limit from 90 per cent to 80 per cent since March this year also meant that HDB home buyers need to pay more cash upfront,” added Mr Li. “Despite this, HDB upgraders can find a less-costly alternative with the upcoming ECs.”

Source: Today, 13 Aug 2010

One wet market-cum-food centre has set off a worried buzz among Sengkang residents.
Expected to be completed late next year, the 4,000-sq m complex is sited opposite the Sengkang MRT/LRT station and bus interchange.

The buzz is over the $500,100 per month bid that won the tender.

Housewife Cyndi Lee, 33, said she was surprised to learn last Monday that the Housing Board had awarded the tender to Renaissance Properties for that sum.

‘With such a high tender, food prices might become very expensive,’ said the Sengkang resident of four years.

Three residents have written to MP Charles Chong of Punggol-Pasir Ris GRC to voice similar concerns. ‘Residents will be hit by the high product and service costs. Will neighbouring food courts follow suit in charging higher prices too?’ said resident Samuel Eio, 37, in his e-mail to Mr Chong.
Renaissance Properties, a subsidiary of foodcourt chain Kopitiam, outbid 24 others for the contract.

The second-highest bidder, Sembawang New Market, tendered at $256,788. It runs three wet markets – in Simei, Serangoon and Sembawang – and has been in the business for more than 20 years.

The tenancy is for a maximum of 15 years, with an option to renew every five years. The site will have an estimated 40 market stalls selling fresh produce, 10 stalls selling dried goods and groceries, and 50 cooked-food stalls.

This is the first time the HDB has let out land for a private operator to build, manage and operate a standalone and naturally ventilated market and food centre. HDB said Sengkang was selected because it is a new town and many residents have asked for additional market and food centres.

However, industry sources told The Sunday Times that, with such a high bid, Kopitiam may have to charge rent as high as $8,000 a month to cover the operating cost.

Chinese evening paper Shin Min Daily News reported that the building cost of a market-cum- food centre ranges from $5 million to $7 million. The average monthly rent for a wet market stall is around $2,000, it said.

The average monthly rent of cooked-food stalls, depending on location, ranges from $1,000 to $4,000, said the president of Bedok North 216 Food Centre and Market Hawkers’ Association, Mr Goh Ah Kee.

In reply to queries from The Sunday Times, the HDB said prices are determined by the private operators and it is in their own interest to price their food and goods affordably.

Mr Chong said: ‘I hate to think of a situation when the prices are too high to patronise and both sides lose. Residents don’t get their services and the operators go bankrupt. But whether it will succeed or not, it is yet to be seen.’

Kopitiam declined to comment.

Source: Straits Times, 5 April 2009