The research study that was done by OrangeTee established that the median price gap between ECs and new condos initially stands at about 20 percent. This is as a result of the sell restrictions that are applied to ECs in addition to constriction costs and the price of land. However, once the ECs successfully pass the MOP and they are privatized, this gap reduces to 9 and 5 percent.
Difference Between Executive Condominiums and Private Properties
What this means that purchasing an EC can be a worthy investment. This study also established the out of the 21 EC properties that were privatized, 13 made losses after the MOP period because they were purchased during the boom phase. However, the remaining 8 made great gains of more than 20 percent.
According to OrangeTee, privatizing an EC project means that it will become profitable. But the amount of profit which owners can make heavily depends on the surrounding supply and locational attributes. This report also alludes to the marketing trends that were highlighted by the Business Times which indicates that most people are purchasing ECs for investment purposes.
Research Between ECs and Private Properties
Orange Tee’s research study also found that when both a private condo and EC are purchased at the same time and held for 10 years, an EC could be the best long-term investment out of the two. Well, this is due to subsidies and their initially much lower prices, unlike private condos which are more costly. Note that EC units can be rented out from the 6th year going onwards and this helps to meet their holding costs. In case an EC is rented out, its price can be at the same range as that of a private condo.
Prices for New Piermont Grand ECs
When Celine Chan, a research analyst from OrangeTee was asked if the findings that promote ECs as suitable long-term investment projects mean that state-subsidized housing which is designed for property buyers from middle-class families is no longer relevant, she said no. Prices of New ECs such as Piermont Grand is also very low compared to Private Properties.
According to Chan, there is a massive price gap between private condominiums and ECs. This means that the ECs are the best alternative option for 1st-time property buyers and HDB upgraders because they are affordable and still have great amenities. Chan continued to state that although there some people may be buying ECs simply for investment purposes, a high number of buyers are purchasing them for personal occupation.