Copen Grand, Tenet test demand for ECs after cooling measures
By Cecilia Chow
/ EdgeProp Singapore |
The Tengah Forest to be transformed into the 700 ha Tengah Town, with five residential districts and 42,000 new homes in the future (Photo: Samuel Isaac Chua/EdgeProp Singapore)
EDGEPROP (SINGAPORE) - A week after the government rolled out property cooling measures to keep public housing prices affordable on Sept 30, at least two residential project launches will proceed as planned. Both projects are executive condominiums (ECs), a hybrid between public and private housing, and will test the demand for this category of housing. “With the limited supply of new ECs coming onstream, it is the right time to launch,” says a City Developments Ltd (CDL) spokesperson.
Set to open for e-application on Oct 7 is Copen Grand EC, by a joint venture between CDL and MCL Land. With 639 units across 12 blocks of up to 14 storeys, the Copen Grand EC is located in the new 700ha Tengah Town, where there will eventually be five residential districts with a total of 42,000 new homes.
“Copen Grand offers buyers a first-mover advantage, being the first EC in the first HDB town that is planned with smart technology town-wide from the start,” says Christine Sun, OrangeTee & Tie senior vice president of research and analytics. (Find HDB flats for rent or sale with our Singapore HDB directory)
Positioned as a smart and sustainable town within a forest setting, Tengah will feature the first car-free town centre, with underground roads freeing up space on the ground level for dedicated walking and cycling paths. Amenities include a future Central Park, a 20ha green lung.
In the eastern part of Singapore is Tenet, a 618-unit EC located at Tampines Street 62, which is targeted for an early to mid-November release. The EC in Tampines North is a joint venture between Qingjian Realty and Santarli Construction.
Artist's impression of the 639-unit Copen Grand at Tengah Garden Walk by City Developments and MCL Land (Picture: CDL & MCL Land)
The two projects are sufficiently differentiated in terms of their catchment, locational attributes and characteristics of the planning areas. “Tenet is in the east while Copen Grand is in the west,” says Ong Teck Hui, JLL senior director of research and consultancy. “Tampines is a mature estate while Tengah is a non-mature estate.”
Tampines has one of the highest resident populations based on the 2022 Population Trends, with 250,000 residents as of June 2022, Ong points out.
Tenet is within walking distance of the future Tampines North MRT Station on the upcoming Cross Island Line. “Tampines is a mature estate and a regional town that will appeal to many upgraders and first-timers who are eyeing an EC in the area,” says Ismail Gafoor, CEO of PropNex.
The last EC project launched in Tampines was Parc Central Residences by Hoi Hup Realty and Sunway Developments. The 700-unit EC project at Tampines Street 86 was launched in January 2021 and was fully sold by end of the year with an average price of $1,174 psf (see table “Recent and upcoming EC launches”).
On the other hand, buyers of Copen Grand are more likely to be those who gravitate towards living in the west or perhaps are enticed by “the concept of Tengah as a smart-energy town”, notes JLL’s Ong.
Artist's impression of the multi-tier clubhouse at Copen Grand, the first EC conferred the Green Mark Platinum Super Low Energy certification by Building and Construction Authority (Picture: CDL and MCL Land)
There has not been an EC launched in the west in the last five years, not since the 497-unit Inz Residence at Choa Chu Kang Avenue 5. Launched in 2017 by Qingjian Realty, the project was completed in 2019 and is fully sold. The latest transaction was for a 990 sq ft unit that changed hands for $1.005 million ($1,060 psf) in August 2021, based on caveats lodged.
Copen Grand is located within walking distance of three MRT stations on the upcoming Jurong Region Line — Tengah, Hong Kah and Tengah Plantation — as well as a bus interchange. Existing MRT stations nearby are Choa Chu Kang and Boon Lay as well as the Jurong East Interchange Station for three lines — East-West, North-South and Jurong Region.
Two neighbouring hubs, Jurong Lake District, the largest mixed-use business district outside of the CBD; and the Jurong Innovation District, a hub for advanced manufacturing, are also nearby. “Copen Grand is expected to do well, given its relatively central location and catchment within the Jurong Master Plan,” says PropNex’s Gafoor.
Developers ‘unlikely’ to adjust selling prices of new ECs
Most of the new EC projects are almost fully sold as of end-September, with only one returned unit at the 496-unit Parc Canberra and 442 units at North Gaia, notes JLL’s Ong. The 616-unit North Gaia was launched in April this year, and units were sold at an average price of $1,298 psf.
“Although there could be some uncertainty due to the recent cooling measures, developers are unlikely to adjust their selling prices in the short term,” says Ong. “Typically, they would try to hold prices when faced with an uncertain market, and all the more so, since the supply of new ECs in the sales pipeline is limited.”
Artist's impression of the upcoming 618-unit Tenet at Tampines St 62 by Qingjian Realty and Santarli Construction (Picture: Tenet website)
Gafoor agrees. “Developers have very little leeway in bringing down the selling prices of these new projects [Copen Grand and Tenet], given that the sites were purchased at prices above $600 psf per plot ratio [ppr],” he says. “The selling prices will be in line with that of recent new EC projects, which is an average of $1,300 psf.”
After all, new launches of 99-year leasehold, suburban condos in the Outside Central Region (OCR) have already achieved average prices of around $2,100 psf, such as Amo Residence in Ang Mo Kio (362 units sold at an average price of $2,109 psf), Sky Eden@Bedok (121 units sold at an average price of $2,104 psf) and Lentor Modern (514 units sold at an average of $2,106 psf), based on caveats lodged to date.
Based on an average of $2,100 psf for new private condos in the OCR, and new EC projects expected to launch at an average of $1,300 psf, the price gap has widened to 61.5%. In the past, the price gap between private condos and ECs in the same neighbourhood was typically in the range of 25% to 35%.
In the Canberra area, for example, Parc Canberra EC was launched in February 2020, at the start of Covid. It is fully sold at an average price of $1,099 psf, based on caveats lodged. Provence Residence EC was launched in May 2021 and is fully sold to date at an average price of $1,175 psf.
Meanwhile, two 99-year leasehold private condos in Canberra were launched last year, namely the 448-unit The Watergardens in August and the 219-unit The Commodore in November. The Watergardens achieved an average selling price of $1,445 psf and The Commodore, an average of $1,491 psf. The price gap between the two ECs and the two private condos is therefore in the range of 23% to 35.7%.
Parc Canberra EC was launched in February 2020, at the start of Covid. It is fully sold at an average price of $1,099 psf, based on caveats lodged (Photo: Albert Chua/EdgeProp Singapore)
Controlled supply, conditions for buyers
The supply of ECs is well-controlled, with the government deciding the number to be released each year, says OrangeTee & Tie’s Sun. EC home buyers have to meet the minimum occupation period (MOP) of five years, similar to HDB home buyers.
After the MOP, EC buyers can sell their unit to Singapore citizens or permanent residents. From the 10th year after completion, the EC is fully privatised, and units can be sold to foreigners without further restrictions, like other leasehold private condos. In 2Q2022, the average price of resale ECs was $1.25 million or $1,090 psf, while the prices of HDB five-room flats in suburban locations are mostly in the $550,000 to $650,000 price range or about $450 to $540 psf, says JLL’s Ong.
ECs cater to aspiring Singaporean homeowners who do not qualify for public housing (the monthly household income ceiling for HDB buyers is $14,000) but find private condos out of their reach. The monthly household income ceiling for EC home buyers is $16,000. “EC is a resilient asset class, and offers a compelling alternative to private residential living, with facilities comparable to private condominiums,” says Lee Sze Teck, senior director of research, Huttons Asia.
Over the past 15 years, EC buyers have seen price gains of 33.7% and 61.5% on the fifth and 10th year of the project’s completion, respectively, says Huttons’ Lee. Furthermore, buyers of ECs do not need to pay additional buyer’s stamp duty (ABSD) upfront, he points out.
Qualifying buyers can get up to $30,000 Central Provident Fund (CPF) housing grants and have an option to take up the deferred payment scheme (DPS). “Demand and prices for ECs remain robust and they should continue to see good interest from buyers, especially in areas where there has not been any new supply in recent years,” says Lee.
More buyers could opt for deferred payment scheme
At the launch of North Gaia EC in April this year, about 60% of the buyers chose the DPS over the normal progressive payment scheme. “In view of the higher interest-rate environment and tighter MSR floor rate, more EC buyers are expected to opt for the DPS in the upcoming EC launches,” says PropNex’s Gafoor.
Like HDB buyers, EC buyers are subjected to the 30% mortgage servicing ratio (MSR). Those taking a loan from HDB will have a limit of 80% loan-to-value (LTV) ratio and will be subjected to a 3% interest rate floor in the computation of their loan repayment capability from Sept 30.
Those borrowing from financial institutions will be subjected to a higher medium-term floor rate of 4% (from 3.5% before) in a stress test. The LTV is unchanged at 75%, from the cooling measures of last December. The overall loan quantum that EC home buyers can borrow is therefore reduced.
From Sept 30, a couple earning a combined monthly household income of $16,000 will be able to borrow up to $1.005 million, or $63,522 (5.2%) lower than the $1.068 million before. “EC home buyers are price-sensitive, and the $60,000 does have an impact, especially for the borderline home buyers,” says Gafoor.
However, EC buyers have an option of “riding out the current high interest-rate environment” by opting for the DPS, says Huttons’ Lee. Households with a monthly income of $16,000 who opt for the DPS will be able to save the $63,552 difference over the construction period. If it is spread over a construction period of five years, that works out to $12,700 a year or $1,059 per month, which can come almost entirely from their CPF contribution, he adds.
The last EC project launched in Tampines was the 700-unit Parc Central Residences by Hoi Hup Realty and Sunway Developments (Picture: Hoi Hup & Sunway Developments)
While private property owners have to wait out 15 months before buying an HDB resale flat — a rule that came into effect on Sept 30 to address the issue of rising HDB resale prices — that does not apply to ECs. “When an EC is five years old, it is already partly privatised,” says Nicholas Mak, head of research & consultancy at ERA Realty Network. “Private property owners or ex-private property owners do not need to wait 15 months before buying a resale EC.” (Find HDB flats for rent or sale with our Singapore HDB directory)
Underlying demand
Both Copen Grand and Tenet will increase the supply of new ECs for sale to 1,257 units. However, Yen Chong, deputy general manager of Qingjian Realty, is confident about the underlying demand. She points to the record number of marriage registrations, which according to the Department of Statistics, was at 28,329 last year.
The percentage of households living in HDB flats has decreased from 82.7% in 2011 to 78.3% in 2021, according to the Department of Statistics. On the other hand, the proportion of resident households living in condos and other apartments has risen to 16.5% in 2021, compared to 11.1% a decade ago.
This year, the number of HDB flats that will reach their MOP is estimated at 31,325 units, according to Statista. This is the highest since the 30,169 units in 2019. Some of the owners may consider selling their HDB flats to buy an EC as a stepping stone to private property, says Qingjian’s Chong.
“If they buy an EC unit, they don’t need to sell their HDB flats immediately, or find a place to rent temporarily, unlike private property owners who have to wait 15 months before buying a resale flat or 30 months before they can buy a unit at a new BTO or EC launch,” continues Chong. “They can take six months to sell their HDB flat when the new EC is completed. For them, it’s the best of both worlds.”
The last launch of an EC project in the west was the 497-unit Inz Residence in 2017 (Photo: Albert Chua/EdgeProp Singapore)
The units at Tenet will be “compact” so that the overall absolute price will be affordable, according to Chong. “Over the years, buyers’ expectations are higher, and we have also increased our provisions to meet their lifestyle needs,” she adds.
ECs in the west
In the past decade, Qingjian has developed eight EC projects, according to Chong. Qingjian and Santarli are joint-venture partners in the upcoming EC project at Bukit Batok West Avenue 8. The duo won the development site in March this year at a bid price of $662 psf ppr.
At the end of September, CDL won an EC site at Bukit Batok West Avenue 5 at a bid price of $626 psf ppr. Both CDL and MCL Land are familiar with the western region, having developed past EC projects such as the 466-unit The Rainforest at Choa Chu Kang Avenue 3 and the 1,327-unit Sol Acres at Choa Chu Kang Grove respectively. Copen Grand will be CDL’s 10th EC project to date.
Unit types at Copen Grand will range from 807 sq ft for a two-bedroom-plus-study to 1,722 sq ft for a top-floor, five-bedroom premium unit. Copen Grand will be the first EC conferred the Green Mark Platinum Super Low Energy certification by Building and Construction Authority (BCA).
It will also be the first private residential project to qualify for the BCA Built Environment Transformation Gross Floor Area Incentive Scheme, aimed at encouraging greater adoption of enhanced Construction Industry Transformation Map standards. “Copen Grand is thoughtfully designed as a smart and resource-efficient project,” says Sherman Kwek, CDL group CEO.
Copen Grand is located near two hubs, the Jurong Lake District (pictured) and the Jurong Innovation District (Photo: Albert Chua/EdgeProp Singapore)
Rob Garman, CEO of MCL Land, adds: “Buyers stand to gain from the first-mover advantage in the new future-forward precinct, benefitting from its evolution around them.”
E-application for Copen Grand will close on Oct 17, with the booking of units to start on Oct 22. Despite the latest round of cooling measures, both Copen Grand and Tenet “should have relatively strong take-up rates” mainly due to their locational attributes, reckons PropNex’s Gafoor.
Check out the latest listings near Copen Grand, Tenet, Parc Central Residences, Sky Eden@Bedok, The Watergardens at Canberra, Inz Residence, The Commodore, Amo Residence, Sol Acres, The Rainforest, Parc Canberra, Provence Residence, North Gaia, Tampines North MRT Station, Choa Chu Kang MRT Station, Jurong East Interchange MRT Station
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