Executive Condo (EC) bubble?

[skizzer]

you forget another impt factor - lease

tt 2011, sm 2019

8 years is not long, but not short either

I can assure u the 8 year lease difference adjusted by for proximity, EC discount issues, will not be able to justify Sumang pricing at 1.1k psf.

For condo, a big part of the value lies in the enbloc redevelopment value, which is significantly less affected by the remaining lease life.

And if u get resale u can cherry pick ur unit, buy those with more enbloc potential, rather than gg in expensive at Sumang at 1.1k psf. It’s the opportunity cost

 

[captain huat]

I can assure u the 8 year lease difference adjusted by for proximity, EC discount issues, will not be able to justify Sumang pricing at 1.1k psf.

For condo, a big part of the value lies in the enbloc redevelopment value, which is significantly less affected by the remaining lease life.

And if u get resale u can cherry pick ur unit, buy those with more enbloc potential, rather than gg in expensive at Sumang at 1.1k psf. It’s the opportunity cost

can u dig out and show us what is the percentage of enbloc between freehold and 99year properties.

my memory is that 99 leasehold enbloc is way way much lesser as compared to freehold.

 

[cet87]

I can assure u the 8 year lease difference adjusted by for proximity, EC discount issues, will not be able to justify Sumang pricing at 1.1k psf.

For condo, a big part of the value lies in the enbloc redevelopment value, which is significantly less affected by the remaining lease life.

And if u get resale u can cherry pick ur unit, buy those with more enbloc potential, rather than gg in expensive at Sumang at 1.1k psf. It’s the opportunity cost

Go read the hundred palm EC thread.
So many complain and talk bad about the EC, ask ppl dont waste time.
But end up they go queue and post they are happy to get the unit.

 

[captain huat]

I can assure u the 8 year lease difference adjusted by for proximity, EC discount issues, will not be able to justify Sumang pricing at 1.1k psf.

For condo, a big part of the value lies in the enbloc redevelopment value, which is significantly less affected by the remaining lease life.

And if u get resale u can cherry pick ur unit, buy those with more enbloc potential, rather than gg in expensive at Sumang at 1.1k psf. It’s the opportunity cost

https://www.squarefoot.com.sg/market-watch/enbloc-market?t=2011

Can track all the enbloc transaction since 1995.

if anyone is wondering what is the enbloc history between freehold and leasehold.

i can safely say, freehold enbloc pct vs 99 leasehold pct is at least 90% more for freehold

dun believe go and track for yourself.

facts dun lie.

 

[skizzer]

Go read the hundred palm EC thread.
So many complain and talk bad about the EC, ask ppl dont waste time.
But end up they go queue and post they are happy to get the unit.

You are using the historical EC price performance to argue about this EC pricing at Sumang. A hougang EC case study done 1.5 year ago before the recent PC price movement upward by ~10%, is not exactly applicable. If you don't understand why it's not comparable, then I suggest you read up on property in general again.

We are analysing this EC Price against comps price in the region. This is how developer, investor, people who willing to do research really analyse the property. My argument is that this EC at Sumang, IF, priced at 1.1k psf represents a really bad value. I'm not saying the hundred palms EC sux, In fact, I MYSELF would gladly buy the hundred palms EC at the price back then. About 800 psf, that is basically 300 cheaper than 1.1k and a full 27% cheaper. AND i would argue that it's certainly not at a worse location than Sumang EC.

 

[skizzer]

https://www.squarefoot.com.sg/market-watch/enbloc-market?t=2011

Can track all the enbloc transaction since 1995.

if anyone is wondering what is the enbloc history between freehold and leasehold.

i can safely say, freehold enbloc pct vs 99 leasehold pct is at least 90% more for freehold

dun believe go and track for yourself.

facts dun lie.

I apologise if I miscom. What i'm emphasizing is a 99 year leasehold condo will not be that much more valuable than a 91 year leasehold condo.

If you look at the Bala leasehold table (which is what HDB purportedly use to value HDB units based on remaining leaselife). a 91 year leasehold is worth 94.8 percent of freehold value (clearly not the case considering how generally freehold is 15% more ex on the actual market), while a 99 year leasehold is worth 96.0% of freehold value. But based on this, dividing 94.8/96 gives u 98.75, meaning based on the Bala leasehold table, a 91 year leasehold is only 1.25% less valuable on nominal terms as compared to a 99 year leasehold.

I agree with you on the freehold enbloc dominate 99 year enbloc. That is true.

Basically, my whole pt is Sumang EC at 1.1k is VERY POOR VALUE as compared to the resale comps nearby (which are about the same or slightly more ex if it's right beside MRT).

The factors that should make Sumang EC lower in terms of its fair market value is:
1) proximity,
2) typical EC discount

The factors that should make Sumang EC fair value increase/higher relatively are:
1) longer leaselife (but as showcased in bala table, it's only marginally higher)
2) delay in payment, because for EC u delay paying a few years, while if u get resale u need to pay now.

As a whole, i strongly believe after considering the above 2 pros and 2 cons, sumang EC at 1.1k psf represents POOR value.

I'm not saying the EC sucks if it's offered at 900 psf. In fact, it's probably cheap if it's sold at 900. It's probably about right if it's sold at 1k psf. but at 1.1k psf (which is what i suspect CDL will have to sell to breakeven or make a small profit), IMO it's poor value

 

[captain huat]

I apologise if I miscom. What i'm emphasizing is a 99 year leasehold condo will not be that much more valuable than a 91 year leasehold condo.

If you look at the Bala leasehold table (which is what HDB purportedly use to value HDB units based on remaining leaselife). a 91 year leasehold is worth 94.8 percent of freehold value (clearly not the case considering how generally freehold is 15% more ex on the actual market), while a 99 year leasehold is worth 96.0% of freehold value. But based on this, dividing 94.8/96 gives u 98.75, meaning based on the Bala leasehold table, a 91 year leasehold is only 1.25% less valuable on nominal terms as compared to a 99 year leasehold.

I agree with you on the freehold enbloc dominate 99 year enbloc. That is true.

Basically, my whole pt is Sumang EC at 1.1k is VERY POOR VALUE as compared to the resale comps nearby (which are about the same or slightly more ex if it's right beside MRT).

The factors that should make Sumang EC lower in terms of its fair market value is:
1) proximity,
2) typical EC discount

The factors that should make Sumang EC fair value increase/higher relatively are:
1) longer leaselife (but as showcased in bala table, it's only marginally higher)
2) delay in payment, because for EC u delay paying a few years, while if u get resale u need to pay now.

As a whole, i strongly believe after considering the above 2 pros and 2 cons, sumang EC at 1.1k psf represents POOR value.

I'm not saying the EC sucks if it's offered at 900 psf. In fact, it's probably cheap if it's sold at 900. It's probably about right if it's sold at 1k psf. but at 1.1k psf (which is what i suspect CDL will have to sell to breakeven or make a small profit), IMO it's poor value

haha ok.

everyone is entitled to their views. no worries. as long as we argue in a respectful manner, all is cool brother.

 

[fotoudavid]

Suman ec will sell I believe. This year I heard got many bto units gonna mop. I think most bto that time should be at punggol and seng kang....

 

[skizzer]

haha ok.

everyone is entitled to their views. no worries. as long as we argue in a respectful manner, all is cool brother.

yeah man! anw end of the day, im just talking lol. im not g to be a market buyer or seller here. so the pricing and sales will rly be determined by willing buyer and willing seller.

 

[annetyu]

Suman ec will sell I believe. This year I heard got many bto units gonna mop. I think most bto that time should be at punggol and seng kang....

What will happen to those bto then? All of them flood the market, cannot sell, cannot pay for sumang Ec. Return back to developer? And what consequence will this have on Punggol market?

 

[dnsfpl]

agree 91 vs 99 not much diff, but as it goes "older"
i think that will make a difference

just sharing my thoughts when i hunt for resale
those 6-8 years vs 14-16 years vs 22-24 years

 

[fotoudavid]

What will happen to those bto then? All of them flood the market, cannot sell, cannot pay for sumang Ec. Return back to developer? And what consequence will this have on Punggol market?

jia lat lor... All selling same time. Time to slash prices for buyers.

 

[Clazav]

No many people aiming for en bloc. Only people with more than 2 properties will try. If you only have 1 condo, will you buy a lok cok condo and wait? Also, if you wanna buy a high en bloc potential unit, the price will be also high. You wouldn't wanna gamble your money for it.

Remaining lease life is important, especially for the first several years.

I can assure u the 8 year lease difference adjusted by for proximity, EC discount issues, will not be able to justify Sumang pricing at 1.1k psf.

For condo, a big part of the value lies in the enbloc redevelopment value, which is significantly less affected by the remaining lease life.

And if u get resale u can cherry pick ur unit, buy those with more enbloc potential, rather than gg in expensive at Sumang at 1.1k psf. It’s the opportunity cost

 

[Clazav]

In 2017 and 2018, there are more leasehold units being en bloc. But before that, freehold units en bloc more.

can u dig out and show us what is the percentage of enbloc between freehold and 99year properties.

my memory is that 99 leasehold enbloc is way way much lesser as compared to freehold.

 

[Clazav]

Yup. I contributed some amount of opinions there too. That thread is an interesting one.

Go read the hundred palm EC thread.
So many complain and talk bad about the EC, ask ppl dont waste time.
But end up they go queue and post they are happy to get the unit.

 

[pippo20]

We all have different perspective of the same thing, here and in reality alot pp cannot afford current exp ec and pc but developers still wanna pressure swee keat to relax cooling measures knn..

 

[pippo20]

Thats why i say govt shd heck care the developers, maybe the big towkays have to downgrade their lambo/ferrari to maserati/merc s class, really poor developers. Sob sob.

 

[pippo20]

Btw, the guy Chia Ngiang Hong who as president of REDAS asked Heng Swee Keat to relax cooling measures esp for first timers is group GM of cdl, the developer of this sumang ec haha. Now he stressed liao cannot sell this ec.

 

[pippo20]

Ownself cdl go start the trend to big high high for this ec land now asking govt for help. Joke lah this guy.

 

[captain huat]

In 2017 and 2018, there are more leasehold units being en bloc. But before that, freehold units en bloc more.

u are correct.

i noticed this especially 2017 and 2018.

maybe one (meaning those current/potential owners in old leasehold 99 condo) has to further investigate if there are any similarities between those 99 leasehold kenna enbloc and then make their own conclusion if the property they are looking has chance for future enbloc.

at the end of this debate i think it boils down to 2 questions:

1) Do you believe all 99 leasehold condos will enbloc eventually?

2) Do you believe, within a certain area, do 99 leasehold condos has better or same chance for enbloc compared to a freehold/999 condos?