Written: March 2021
Parc Greenwich, one of the recent Executive Condominiums (EC) being launched this year, has a stellar result of hitting Fraser’s record high of 65% units sold during its weekend launch. In fact, it would be Frasers Property’s best-selling EC so far this year. With 322 out of its 496 units sold within 2 days, it is a clear sign that Parc Greenwich is a popular choice among many interest homebuyers and investors alike.
For those that are interest to understand why Parc Greenwich has been such a popular hit, we take this chance to deep dive into the attractiveness of ECs, and why Parc Greenwich in particular is one you should consider.
Price analysis: The Lowest Entry Price
When it comes to buying a project unit, the price is definitely a huge factor to be considered. When it comes to Parc Greenwich, we notice that its entry price is generally at least 15% lower than comparable new launch condominiums. From the table below, Parc Greenwich was able to secure a low land price of $555 psf ppr, which resulted in its average current transacted price to be at a competitive $1,185 psf. In comparison, we see Sengkang Grand Residences with a land cost of $923 psf ppr, and a average transaction price of $1,713 psf. This is a huge 45% price disparity, which shows how price competitive Parc Greenwich is. No doubt that the other projects are private condominiums – however, if you take into consideration that ECs will eventually be privatised as well, this is a very attractive entry price to consider.
Prices has rose steeply over the last 2 years, and ECs has increasingly represented an opportunity to buy an under-valued property and enter the market at lower prices. We see from the next table that it is possibly the only current option for a brand new 3 bedroom under $1,150,000 islandwide!
In the future: Will ECs cost less?
Some of you might wonder that given the ebbs and flows of a property market, would it be possible that future ECs could cost less if there was a dip in the market. We took the chance to do some analysis and would like to share that unfortunately, that does not seem to be the case.
Take a look at the news article below – in the latest news, we see that construction raw material prices are looking to stay high amid supply chain and shipping disruptions. As quoted from a SCAL spokesperson, they are concerned that “steel rebar prices have risen 54%, alumimium prices 59%, copper prices 81%, concrete prices more than 20%”. With the uncertainties in logistics and operations arising from the COVID situation, we are seeing construction costs increasing at an alarming rate.
We also take a look at the recent EC land sales, where we compare newer land transactions to Parc Greenwich. When Parc Greenwich sealed the deal in March 2020, it was at $555 psf ppr. Within just 8 months later, we see the Yishun Avenue 9 land parcel closing at $576 psf ppr, which is already $21 psf ppr higher than Parc Greenwich. Further down the timeline, we see Tengah Garden Walk closing at $603 psf ppr, which is again even higher by $27 psf ppr!
For Tengah Garden Walk, at the land rate of $603 psf ppr, breakeven prices are estimated to be around $1,027 - $1,077 psf. Taking that into account, the developer will probably launch at about $1,2xx psf. This will make it considerably more expensive than Parc Greenwich that has its average transaction at $1,185 psf.
In fact, we are also seeing the recent Tampines St 62 parcel being closed at $659 psf ppr, which is approximately 20% more than Parc Greenwich’s land cost of $555 psf ppr.
With a steady rise in construction cost and land cost, how can it be possible that future ECs will cost less?
Another factor to consider: Greater Potential for Appreciation
Through the records of all the ECs, we see that ECs have historically performed much better in value appreciation, allowing it to enjoy a greater percentage gain. Taking a look at the list of ECs below, we see that most of the ECs have fared considerably well, with percentage gains ranging from 23% to 45%. Most of it are also hovering around the high 20 and 30s as well. This is definitely a given, since ECs have a much lower entry price and therefore, stand to have a higher profit when they exit the market.
We take a look at Esparina, where it has an average growth of 4.7% gain per annum. Across 11 years, this means almost a 52% gain for those that exit the market thereafter. In fact, we also see that there were none of the transactions that were unprofitable as well. This means that all of its sales had profitable gains – a complete successful and winning situation.
Next, we observe Prive’s capital appreciation performance. We also see an average gain of 4.4% per annum, which bring it to approximately 44% gain for 10 years. We also see that there were none of the transactions that were unprofitable as well. This means that all of its sales had profitable gains too!
Finally, we also see Austville, which mirrors Prive’s capital appreciation. With an average gain of 4.4% per annum, Austville was also able to enjoy approximately 44% gain for 10 years. Here, we also see zero transactions that were unprofitable. This is a strong testament that ECs are generally built with a strong buffer for growth.
As the old saying goes – ECs are for the privileged. Afterall, it is not everyday that we see an EC new launch that is available for purchase. This is also the reason why Parc Greenwich is so popular. With the attractive entry price and high potential profitability, Parc Greenwich is certainly a unit for you to consider.
Still unsure and have questions on the property? If you would like property guidance that is tailored to your needs and preferences, feel free to reach out for the latest property news and updates.
The above is written by Kaeden Ong. To know more, contact him at +65 9048 0660.
The information provided is for generation information purposes only and does not have regard to specific investment objectives, financial situation and the particular needs of any recipient hereof. No information here should be used as legal, taxation or investment advice.