ECs: Cooling measures? What cooling measures?!

Some Executive Condominium (EC) developers have seen higher sales despite the government introducing a package of cooling measures on January 12.

EC projects like One Canberra and Watercolours, which were launched last year, have seen sales jumped by about five times after the measures kicked in.

In the two weekends after the new measures kicked in, One Canberra sold 30 units, up from two to three units per week before the announcement.

Over 60% have been sold after it was launched for sale in June 2012.

Mr Ken Yeo and his wife spent two months hunting for a new home and they finally bought one after the government introduced the seventh round of cooling measures last month.

The couple bought a 3-room dual-key executive condominium at One Canberra at Yishun for $813,000.

They intend to have their parent-in-laws move in with them when the new home is ready.

Mr Yeo said: "Talking about the price is one thing. It might be going up in the near future and there might be more cooling measures coming out. They were the two main concerns."

ECs hogged the headlines when a luxurious penthouse unit was sold for over $2 million last year.

It prompted the government to introduce a few measures targeting the segment to make sure that ECs do not stray from its objective of providing alternative housing for the sandwiched class.

Under the new rules, the maximum size of an EC unit must be no larger than 160 square metres. Some developers said this will encourage the industry to review how units are being laid out and improve space planning.

For instance, Global Property Strategic Alliance, which is jointly developing Watercolours EC at Pasir Ris, said it is looking at rolling out a new type of unit - a maisonette - in its next EC project.

Watercolours is developed by Huge Development, a joint venture between Ho Lee Group, UE E&C, GPS Alliance Development & Investment and EVIA Real Estate.

Jeffery Hong, chief executive officer of Global Property Strategic Alliance, said: "Typically in the 2-storey penthouses, if you look at the second floor, it is basically the master bedroom and the roof terraces. This is unlike the maisonette whereby your first level will be your living and dining area, and the second floor will be all your bedrooms instead of terraces."

Watercolours have also sold 20 units in the last two weekends. This is more than five times from before the cooling measures were implemented.

Watercolours was launched mid last year and over 70% of units here have been sold so far.

Under another new measure, developers will only be allowed to launch units for sale 15 months from the date of award of the EC sites.

Industry players said this will weed out weaker developers.

Richard Nah, senior manager at MCC Land Singapore, said: "The immediate income for new development upon launch is the five per cent booking fee. And when they exercise the sales and purchase agreement, it will be another 15%. This is about 20% of the sales price.

"This will go a long way into mitigating some of the cost (construction, marketing, building and running of the showflat) that the developer will have to shoulder. If the developer were to lose this avenue where they can get the funds from, they would either need to have strong financial backing or finance this through the banks. This will further add to the cost of the development."

Analysts expect seven new EC projects to be launched for sale this year from sites awarded in 2012.

Assuming all the projects are fully sold, analysts said there won't be any new EC units in the market in the first half of next year as a result of the 15-month restriction on sites sold after January 12.

They added that ECs will continue to be popular among home buyers and they expect prices to remain stable this year.

Source: Channel News Asia