Executive condominiums VS. Condominiums: Which is a greater investment?
When it comes to investment, it seems that properties are always a popular choice. However, is it right to determine that one is usually more profitable than the other? In this case, we look at the comparison between executive condominiums (ECs) and condominiums.
First, it is safe to affirm that the prices of an EC generally will rise overtime to reach that of condominiums. However, the contention is whether the rise in value compensates for the time lost, and if the amount can cover the extra payment for a condominium instead of an executive condominium.
For one, a study by OrangeTree suggest that generally, the price gap between new condominiums and ECs begin at near 20% mostly since there are sales restrictions on ECs. However, once we get that out of the way by fulfilling the MOP and reach privatization, the discount actually narrows to a 9% and 5% respectively. Furthermore, once MOP ends, property owners will be allowed to sell their ECs to Singaporeans and Permanent Residents. However, the extra step of privatization allows ECs to be sold to foreigners as well.
Once privatization is accomplished, ECs generally have a higher chance of being profitable as well, since it is also able to generate other forms of income. For one, a newspaper research by the Business Times revealed that increasing vacancy rates could signify that residents are renting out the rooms or waiting for its value to skyrocket before selling for huge profit. Therefore, it is safe to assert that EC could be a better buy in comparison to purchase instead of resale houses.
For example, a couple named Jason and Jinnie are both houses for their future family. Their combined is about 15,000 and a loan of only 80% for their new condominium, actually requires the same rent costs as an EC with a 1100 square even though their market price are very different. Hence, it might actually be very possible that for properties meant for renting, couples might want to consider to purchase EC flats since they earn the same amount but cost less.
That being said, an extra word of caution would be that not all properties are profitable just because of their project nature. Just because they belong to a certain property type, if their other factors like amenities and location are poor, the price you fetch could unfavorable. Furthermore, whether if it’s a profit also depends on how much you attained it in comparison to how much you sell, as it will show the profit margin right away.