Record Bid for Buangkok EC site

We read in the Business Times today that a 99-year leasehold executive condominium (EC) housing site near Buangkok MRT Station has fetched the highest ever bid for an EC site.

The top bid from a partnership between Frasers Centrepoint and Lum Chang Building Contractors of $193.28 million or about $315 per square foot per plot ratio (psf ppr) surpassed the previous record of $220psf ppr for the Summerdale EC site in Boon Lay in May 1997.

The tender drew a total of 11 bids, reflecting developers’ continuing hunger for land. The top bid came in slightly above market expectations in January, when the HDB launched the site. ECs are a hybrid of private and public housing – it is built by private developers but buyers are subjected to HDB rules and regulations on eligibility for purchase of such apartments.

With Lum Chang expected to provide construction services for the project, the tie-up should be able to minimize construction costs, as noted by industry observers. By some market estimates, their breakeven cost for a new EC project could be below $600psf. The duo is expected to build a higher proportion of small units to try and achieve higher per square foot selling prices. But there will be a limit as to how small the apartments can be, given the high standard of public housing set in the area, e.g. HDB Aspella, comprising premium HDB flats next to Buangkok MRT Station.

A possible option, and one which Frasers Centrepoint has done before, is to have some apartments with its “dual-key concept”, where a regular-sized apartment and a granny flat (with its own kitchenette and bathroom) are packaged as a single unit.

It is believed that Lum Chang could sell their units in the $650 - $680psf range on average. Based on that, a 1,200sqft unit in the new development would be priced at about $800,000. A Fraser Centrepoint spokesman has said that they plan to build about 500-plus units on the site.

In the secondary market, three EC projects in the north-east region – The Rivervale, Florida and Park Green – have sold at $520 - $600psf between Oct 2009 and Feb 2010.

EC are strata-titled apartments with facilities comparable to private condos. New ECs are sold with initial eligibility, ownership and resale restrictions similar to public housing; but these are completely removed after 10 years.

Amongst the buyer eligibility criteria is a maximum $10,000 monthly household income. Qualifying first-time buyers who purchase new ECs may also apply for a $30,000 CPF housing grant.

The wining tenderer will have to set aside 95% of units in the initial month of sale for first-time buyers – those who have yet to receive a housing subsidy from government. Second timers buying new ECs do not need to pay the resale levy.

What amazes the wife and I most about the BT report was… $800K for a 1,200sqft EC in Buangkok?! We are certainly living in crazy times indeed!

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