OrangeTee: ECs in S’pore yield resale profits as demand exceeds supply

Executive condominiums (ECs) in Singapore are reportedly growing to become an appealing option for HDB or housing board upgraders, with roughly 300 ECs generating $500,000 in resale profit as of Aug 29.

OrangeTee's profit analysis found that nearly all the evaluated 4,266 ECs made over $300,000 in gross profits since demand vastly outweighs supply.

294 of these 4,266 units generated at least $500,000 in gross profit each. The resale unit in CityLife@Tampines set a new record for an EC's gross profit in 2021 with $1.38 million, closely followed by a resale unit at The Quintet in Choa Chu Kang with $1.02 million.

According to OrangeTee, 4,000 of the tested units were sold in less than 10 years after the purchase date.

The study also identified a shrinking price difference between new and resale of ECs, from 28.6% in 2019 to 14.4% in January-August 2022.

Resale ECs' median price increased by 30.3% to $1,115 per square foot during the initial eight months of 2022 from $856/sq. ft. in 2019, increasing faster than newer ECs’ median price. In contrast, new ECs increased by 15.9%, from $1,101/ sq. ft. over the same comparable period to $1,276/ sq. ft.

The study found that size is important in these properties as larger units often command higher costs.

OrangeTee discovered that 170 ECs with a minimum square footage of 1,600 earned an average gross profit of $455,207 per unit.

The average gross profit for units between 1,200 and 1,599 square feet was $362,997, while the average gross profit for 2,717 units between 800-1,199 square feet was $268,493.

Private developers construct ECs, a mix of public and privately owned housing, but they are less expensive than private condos. Ten years after its completion, an EC project becomes privatized, allowing foreigners to purchase it.

For the profitability assessments, OrangeTee compared the latest sale caveats from URA Realis between 2007 and August 21, 2022, to the resale caveats, of the same unit and time frame, to determine the losses and gains of each EC unit.

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