Last week, Singapore’s Minister for National Development Khaw Boon Wan, posted a cautionary article on Housing Matters, the online mouthpiece of his Ministry.

In this article, he reminded developers about the intended purpose of the Executive Condominium (EC) niche, and the role they played in fulfilling this purpose.

“EC is to help Singaporean families earning within $12,000 per month acquire a condominium at below market rate. This is achieved through zoning and tendering out the land as specific for EC, thus allowing the developer to acquire it cheaper than private condominium land.” – Housing Matters

His post was triggered by a recent report in the media of an EC penthouse that sold for SGD1.77 million.

“The recent media highlight on an EC penthouse supposedly sold for $1.77 mil has raised some eyebrows.” – Housing Matters

I shan’t bore you, dear readers, with the math which has probably been done a thousand times or more by now. But suffice it to say, even right at the upper limit of the income cap, the buyers will need to cough up a big wad of cash every month to service the loan, in addition to the hefty initial down payment. I’d say we are well past public housing territory, and deep in the cut-throat jungles of private property in this case…

It is no surprise then, that Minister Khaw had this to say:

“We provide EC developers with much flexibility, but they must be mindful that flexibility must be exercised in keeping with the intent and spirit of the EC policy.” – Housing Matters

Especially since another luxurious penthouse is about to get to market in the coming months. The lavish 4,349 square-foot presidential penthouse suite at the CityLife is touted as “Singapore’s first luxury hotel-style” EC.

“The 514-unit CityLife, which is being built by Amara Holdings, Kay Lim Holdings and SingXpress Land, will have an infinity pool and four- to five-bedder “Skysuite” units with open terraces.” – The Straits Times, 22 Nov 2012

We think he has every reason to be worried, as developers are starting to flex their muscle with the EC scheme, to capitalise on this surging property market, just as they did with the Design, Build and Sell Scheme (DBSS). We all know how that turned out, don’t we?

The combination of greedy developers, free-market forces and unsavvy hype-buyers led to many unhappy voices, negative comments and finally the scrapping of DBSS. But can we really blame developers for being greedy? After all, they are a business in a capitalistic environment, with the same bottom-line as any other business. And that bottom-line only recognises one thing: profit! Another thing about a capitalistic environment? A change in prices of similar goods will have a ripple effect on the whole market. As long as HDB apartment prices keep rising, and occasionally spiking through the SGD1 million mark, can we expect any different from EC prices, which are supposed to be even higher?

While flexibility for developers is supposed to be the hallmark of the EC scheme, perhaps Minister Khaw should consider a cap or harder guidelines for developers of ECs. This will ensure that buyers do indeed benefit from the cheaper land prices, in the “spirit of the EC policy”. It will also put the onus on developers to exercise flexibility in providing as much value as possible within the specified price guidelines, instead of simply just pricing at what they can get away with.

Alternatively, a cap could be placed on the maximum floor area of each unit, or even a pricing cap for the SGD30,000 government grant available to EC buyers. After all, should we really be using public housing funds to subsidise people buying multi-million-dollar luxury penthouse condominiums, EC or not?

In conclusion, great power comes with great responsibility. To be given flexibility in developing state land is a great power, make no mistake! Unfortunately, it seems not every company handles great responsibility equally well; and it may well be that HDB will once again end up scrambling to make up for errant behaviour. It remains to be seen if the same mistakes by DBSS developers will be repeated, and the same results occurring in the EC market.

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  2 Responses to “ECs – Executive or Exclusive?”

  1.  

    nice site, all posts are very nice.

  2.  

    This reminds me of something I saw a while back. Good stuff!

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