How can I Maximise the Value of my Executive Condominium (EC)?
By now, you should know what is an Executive Condominium (EC).
To put things simple, an EC is a Subsidised Condo. The key difference is an EC follows HDB ruling for the first 10 years. Buyers will have to fulfill the eligibility criteria and can only sell after the Minimum Occupation Period (MOP), which is 5 years after the Temporary Occupation Period (TOP).
So who can buy the EC after MOP?
After MOP, ECs can be sold to Singaporeans and Singapore Permanent Residents (PR). And that includes Single PRs (who otherwise can only consider private condos). Subsequently after the 10 year mark, EC can be sold to anyone (including foreign nationals).
Does it mean that ECs are run by HDB during the first 10 years?
That is a very common misconception and the answer is no. An EC is run and managed by the Management Committee, similar to any private condo. In fact for normal cases, the only time you will see the HDB logo is right after making the purchase when you will need to fill up the mandatory HDB forms and just before TOP when you will be sent the Final Particulars Form.
Other than those mentioned, perhaps the only thing that reminds you it is an EC is the Subsidised Price!
What is the Value of EC?
Let's take a recently MOP EC: Prive in Punggol as an example. Prive TOP in July 2013 and MOP in Jul 2018.
Prive was launched in 2011 at an average of $686 per square foot. The average price after the EC MOP in 2018 was $954 per square foot which represents a close to 40% appreciation for the Owners.
In fact, immediately after the MOP in mid July till November 2018, there were more than 100 transactions in Prive! And all transactions are profitable. 0 unprofitable transaction till date.
Most ECs experience the same growth. I do not have much space to list down for all ECs. You may message me if there is any particular EC of interest.
How can I Maximise the Value of my EC?
Here comes the most important question. Yes, now I know the value of my EC but can I further maximise the value? The answer is Yes, and there are a few options available, depending on your objectives.
As with all developments, some owners will rush to sell upon MOP, some will observe (wait and see), some will wait till 10th year hoping for another jump in appreciation. Different market calls for different strategies.
Let us look at another EC: La Casa in Woodlands. La Casa TOP in February 2008 and MOP in February 2013. Privatised on February 2018.
Looking at the chart below, La Casa Owners A, B, C, D all bought into La Casa in 2005.
Owners A and B decide to sell their unit upon MOP in 2013. Their neighbours C and D decide to sell their units in 2019 after privatisation.
Despite holding for 6 more years and waiting for privatisation, Owners C and D actually earn lesser than A and B!
So it does not necessarily mean that holding longer will mean more profits.
And that is not all.
Owner A moved on to buy a unit in Riversails #09-32 (price below). He likes units on level 9.
At the end of the day, with the same holding period, Owner A profited a total of $635k! Much higher than the $403k of Owners C and D.
Despite that, Owner A regretted that if he had used the $423k proceeds to buy 2 units at Riversails, he could have profited a much more enviable $847k!
What if I plan to keep my EC?
Another approach for Owners who prefer to keep the EC is through Part Share Purchase, or commonly known as Decoupling. Where one party, for example, the husband buys over the wife's share of the EC.
This makes the husband the sole owner of the EC and the wife can purchase another property for investment purpose. As the wife has no property after the Part Share Sales, she will be able to buy the investment property as her first property, which attracts no Additional Buyer Stamp Duty (ABSD).
We hope this short guide is able to give you some insights into how we help our clients plan their Property Portfolio.
At the end of the day, we need to understand that we all have different ambitions, goals and limitations. It is therefore important for you to speak to an experienced and knowledgeable realtor who will be able to explain and illustrate the various scenarios, and customise a unique solution for you.