Executive Condominiums (ECs) are a type of subsidized housing in Singapore designed to provide affordable housing to the middle-income families. These types of homes come with more facilities than traditional public housing and have become increasingly popular among Singaporeans. However, with the rise of prices in recent years, people are questioning the profitability of buying an expensive executive condo in Singapore.
We have been offering Executive Condominiums to customers since 2013, and ever since then, we have heard complaints about the high cost of these properties. Is it for sale, or is it not?
Our goal today is to assist you make a more informed real estate investment by analysing the success of the “expensive” Executive Condos we’ve promoted.
What are Executive Condos?
Executive Condos (ECs) are a type of subsidized housing in Singapore. They were introduced in 1994 to cater to the needs of middle-income families who cannot afford private housing but do not qualify for public housing. ECs come with various facilities and amenities like swimming pools, tennis courts, and BBQ pits.
The Rise of Expensive Executive Condos
The prices of ECs have been steadily increasing over the years. The first EC launched in 1995 was priced at around $500,000, but recent launches have prices reaching up to $1.2 million. This sharp increase in prices has made people question whether buying an expensive EC is a wise investment.
The Factors Affecting the Profitability of Expensive Executive Condos
Several factors determine the profitability of buying an expensive executive condo in Singapore. Below are some of the factors to consider.
- Location
The location of the EC is an essential factor in determining its profitability. Executive condos located in prime areas will be more expensive but may offer a higher return on investment in the long run.
- Supply and Demand
The supply and demand of executive condos in a particular area will also affect the profitability of buying an expensive EC. If there is a high demand for ECs in a particular area, prices are likely to go up.
- Developer Reputation
The reputation of the developer is also crucial in determining the profitability of an expensive EC. Developers with a good reputation are more likely to deliver high-quality projects that are attractive to buyers.
- Price of Similar Properties in the Area
The prices of similar properties in the same area should also be taken into consideration when determining the profitability of an expensive EC. If the prices of similar properties are high, it may indicate that there is a high demand for housing in that area.
The Benefits of Buying an Expensive Executive Condo
Despite the rising prices of ECs, there are still several benefits of buying an expensive executive condo in Singapore.
- Amenities and Facilities
Executive condos come with more facilities and amenities than traditional public housing. These facilities include swimming pools, tennis courts, BBQ pits, and more.
- Capital Appreciation
Executive condos are known to have high capital appreciation. This means that the value of the property is likely to increase over time, providing a good return on investment.
- Eligibility for Housing Grants
Buyers of executive condos are eligible for housing grants from the Singapore government. These grants can help reduce the cost of the property, making it more affordable.
The Risks of Buying an Expensive Executive Condo
Despite the benefits of buying an expensive executive condo in Singapore, there are also several risks to consider.
- Affordability
Expensive executive condos may not be affordable for everyone, especially for middle-income families. The high prices may make it difficult for them to secure a loan from banks.
- Additional Costs
Executive condos come with additional costs like maintenance fees and sinking funds. These costs can add up over time, making the property less profitable.
- Competition
There is a lot of competition in the market for executive condos. If there are too many units available in the same area, it may affect the demand.
The majority of EC Deals Turned a Profit
Out of 1,780 resale transactions at 17 different Executive Condos, an incredible 1,773 resulted in a profit for the seller, while only seven resulted in a loss.
The percentage of profitable trades was 99.61 percent, while the percentage of unsuccessful ones was 0.39 percent.
Profitable Enough
Every one of the 18 projects we looked at made a respectable profit, with the average return on investment being at least 3.03% per year on at least S$200,000 in investment capital. Eighty-plus percent of resale deals netted at least S$200,000, and 78 percent had a return on investment of 3 percent or more annually.
With an average annualised return of 3.72% based on 1,773 successful deals, the average profit is S$292,699.
Normanton Park is the most lucrative real estate in Singapore, with an average profit of S$406,198 and a record-breaking S$1.376 million in one sale. The 4.63 percent annualised return on the Amore is the greatest of any model, so must visit Dunman Grand and The Continuums.