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Market Watcher Series Issue 6

Price Growth of Executive Condominiums
99.9 per cent of ECs made a gross profit averaging around S$310,000 each. ECs are a hybrid of public and private housing sold at lower prices than private condos, despite being built by private developers. An EC project is privatised 10 years after its completion; thereafter, units can be sold to foreigners. For the profitability analyses, the gains and losses of individual EC units were calculated by matching URA Realis new sale caveats between 2007 and 20 November 2022 to the resale caveat (if any) of the same unit over the same time frame. The calculation does not consider costs such as legal fees and interest. 

As of 20 November 2022, there were 4,676 matched caveats mined from a database of 27,403 new EC transactions (the balance units were either not put up for resale or did not lodge a caveat). Out of this number, 99.9 per cent or 4,673 units made an average gross profit of S$310,114 each, of which 4,355 units were sold less than 10 years from the date of purchase. 1,490 units made a gross profit of between S$200,000 and less than S$300,000 each. 

Bigger ECs tend to fetch higher profits. 2,971 units between 800 sqft and less than 1,200 sqft yielded an average gross profit of S$282,075 each, while 1,218 bigger units of between 1,200 sqft and less than 1,600 sqft yielded an average gross profit of S$380,898 each. The largest ECs yielded the highest profits with 181 ECs of at least 1,600 sqft yielding an average gross profit of S$470,730 each. 


Price gap narrowing between new and resale ECs. Due to the high profitability of ECs, demand for resale ECs has been rising. As a result, the median price of resale ECs are climbing at a faster pace than new ECs, growing by 31.2 per cent from S$856 psf in 2019 to S$1,123 psf in the first 10 months of 2022 when compared to new ECs which grew by 20.1 per cent from S$1,101 psf to S$1,322 psf over the same period. Consequently, the price gap between new and resale ECs dipped from 28.6 per cent in 2019 to 17.7 per cent in Jan-Aug 2022.


The highest gross profit hit S$1.38 million while the next highest profit was slightly above S$1 million. 4,358 out of 4,676 or 93.2 per cent of the matched caveats were resold within 10 years from the purchase date. 76.6 per cent (3,340 of the 4,358 resold units) made a gross profit of at least S$200,000 each before the Sellers’ Stamp Duty. Of this number, 333 units reaped a profit of at least S$500,000 each and 34 units made at least S$700,000 each. A unit at CityLife@Tampines bought in 2013 for S$1.91 million and resold for S$3.29 million in 2021 yielded a record profit of S$1,376,100. Another EC at The Quintet was resold in 2013 for a gross profit of S$1,017,900. While the profits of large units are high, new ECs exceeding 1,600 sqft will no longer be built under current government guidelines.  

All 318 ECs resold after 10 years made a profit. 307 of these units made profits of at least S$200,000 each, with 81 units making at least S$500,000 profits each. The average gross profit for these units was S$409,678, with the highest profit of S$1.099 million recorded for a unit at The Tampines Trilliant in November 2022. The next highest profit was for an EC unit at Prive which made S$824,600 in November 2022 as well.


Demand far exceeds the supply of ECs in recent years. Prices are holding steady possibly because of a lack of EC supply. Based on URA monthly developer sales data, 2,179 new ECs were sold in 2021 which is more than the 1,609 units launched that year. Before the pandemic from 2016 to 2018, sales of new EC units similarly exceeded launched units. 

Outlook 

Tenet at Tampines St 62 is launched for sale in December. Tenet is located near the upcoming Tampines North MRT. There have been no new EC launches in Tampines since the launch of Parc Central Residences in 2021. With around 6,000 flats having reached their five-year minimum occupation in Tampines and Pasir Ris from 2019 to 2022, we expect keen upgrader interest for Tenet. Moving forward, there will only be three more EC sites - Bukit Batok West Avenue 8 and Bukit Batok West Avenue 5 that have been sold and are slated for launch in 2023 / 2024, and Tengah Plantation Loop which will be launched for tender in December this year. 

‘Many buyers find ECs affordable, especially since prices of new condos in the suburbs have risen substantially over the past year. Given their low entry prices, many ECs have yielded hefty profits in recent years. Moreover, the supply of new ECs is projected to be low over the next two years. Considering the limited supply and high profitability of ECs, demand may remain firm despite the new cooling measures.’- Christine Sun, Senior Vice President of OrangeTee & Tie Research & Analytics