By Romesh Navaratnarajah: Developers of executive condominiums (ECs) are enjoying smooth sailing despite stiff competition among other housing types, as ECs typically have a pricing edge over condos due to lower construction costs.
With lower building costs, developers can sell units at lower prices compared to private apartments, but the price gap will eventually narrow once the EC completes its Minimum Occupancy Period (MOP) and resale restrictions ease.
Square Foot Research found that ECs can be built at 22 percent below its private counterparts. This explains why EC projects are typically priced 25 percent lower than private homes.
In addition, the Housing and Development Board (HDB) enforces a household income of S$12,000 a month for EC applicants. With these factors, developers can achieve a lower land cost.
From the six EC projects analysed by Square Foot Research, it was found that average construction costs of ECs stood at S$209 psf ppr, much lower than the S$256 psf ppr average of nine recently launched mass market projects.
The construction costs typically reflect the project's fittings and features but do not cover piling works.
Compared to ECs which typically have less frills, private units boast more complex architectural designs and additional facilities.
Chris Koh, Director at Chris International, suggested that the price gap in construction costs may be attributed to ECs being equipped with multi-storey car parks and not the more expensive basement types. Related Stories: Khaw urges caution, slams 50-year loan
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