EXECUTIVE condominiums (ECs) are back in the spotlight these days as private property prices climb beyond the reach of many upgraders.
These 'hybrid' properties, which come with the type of facilities found in private condos but with sale restrictions, were introduced in 1995 to help higher-income couples who had been priced out of the then booming private property market.
These projects became rarer during the property slump that followed their introduction.
However, their popularity has been revived of late given the growing gap between the prices of private and public housing.
One EC site in Punggol is on the reserve list, while another three EC sites, in Yishun, Jurong and Sengkang, will be added in the first half of next year.
This means they will be put up for tender when a developer commits to bidding a minimum price that is acceptable to the Government.
The outlook for resale ECs seems just as bright as that for new ECs. The first crop of ECs is nearing the 10-year mark, and they are looking more appealing in terms of investment value.
This is because, while resale ECs are generally 10 to 15 per cent cheaper than their fully private counterparts, their values are expected to rise when they turn 10 years old.
This is the point at which restrictions will be completely lifted, so they can be bought by anyone, including foreigners, and can hence be sold like any other type of private home.
New ECs cannot be sold within the first five years. They can be sold after that but, until they turn 10, only to Singaporeans and permanent residents. This effectively places a cap on their sale prices; there is no such cap on private condo prices.
Six of the existing 23 EC projects - Eastvale in Pasir Ris, Westmere in Jurong East, Simei Green, Windermere in Choa Chu Kang, Chestervale in Bukit Panjang and Pinevale in Tampines - will turn 10 in 2009.
Another seven projects will 'mature' one year after that.
The director of research and consultancy at Colliers International, Ms Tay Huey Ying, said: 'The investor is likely to enjoy some capital appreciation in the short to medium term, provided the upcycle for the residential property market is sustained till then.'
The locations of the older ECs are a major attraction. The managing director of C&H Realty, Mr Albert Lu, said: 'All ECs within a 10-minute walk of MRT stations will be good buys. As more spaces near MRT stations are taken up, the value of nearby ECs will continue to rise.'
Many of the first few ECs, such as Westmere, Simei Green and Eastvale, are located within walking distance of MRT stations.
The rental yields are attractive too. The rents they fetch are comparable to those for private condos: They come with similar facilities, but their yields are higher because they cost less to buy in the first place. The chief executive of property agency PropNex, Mr Mohamed Ismail, estimated that ECs have rental yields of 5.5 to 6.5 per cent, compared with just 4 to 5 per cent for private condos.
Still, there is some downside to buying resale ECs. House hunters should not expect luxurious trimmings because new ECs can be bought only by households earning not more than $10,000 a month. Mr Colin Tan, the head of research and consultancy at Chesterton International, said: 'To ensure a reasonable profit margin, developers might lower the quality.'
For home hunter Tan Song Teng, 43, the biggest pull factors for resale ECs are their location and price. The banker, who is looking to buy a three-bedroom unit in Simei Green, said he was attracted by the lower price and the proximity to Simei MRT station.
'You won't be overpaying,' he noted, predicting that even if the value of the property does not rise, it will not drop below current levels.
