Prime locations are often synonymous with prestige and luxury, attracting homeowners who can afford the high price tag of these properties. However, the exclusivity and scarcity of options available for middle-income individuals in these areas can perpetuate social stratification and limit opportunities for them.
This seems to be further accelerated by the rise in private home prices post-pandemic, highlighted in URA’s data which showed a 26.6% increase from 2019 to 2023. This makes it significantly more challenging for Singaporeans to fulfil their ambitions of owning private housing in the near future. And so, a good way for these homebuyers to one day own a private property is to invest in an executive condominium.
Executive Condominiums, or ECs, have carved a specific niche for themselves in Singapore’s real estate landscape as a highly sought-after housing option. These developments are an attractive choice for homebuyers as they offer a perfect blend of the luxury and exclusivity that comes with private housing, and the affordability of public housing.
What can further enhance the appeal of owning an EC is a strategic decision by the government to build more of them in prime locations in Singapore. In this article, we explore the benefits that come with developing executive condos in prime locations and how this can be advantageous for both developers and residents alike.
Where are Executive Condos Typically Built?
Historically, ECs have been built in more suburban, residential areas as compared to central, or prime locations. They were developed with the intention of providing first-time homebuyers with an affordable housing option that came with a mix of public and private housing features.
To keep the prices of ECs on the lower end, most of them have been developed in non-central areas where land is cheaper. While this tradeoff on location allows homebuyers to purchase affordable homes, they must also deal with a few downsides.
Drawbacks
The first disadvantage of the locations of ECs is the distance from town centres. As they are located far away from the city centre, residents also generally have limited access to a wide range of amenities. Restaurants, shopping malls, cultural attractions and other entertainment venues require a longer travel time and higher transportation costs.
And you would think that this is a problem that comes with a simple solution — public transport, right? Not really.
Another drawback of the location tradeoff is the lack of MRT stations are not in closer proximity to most of these projects. Residents of ECs do not have extensive public transportation networks close to them and have to either walk to the closest MRT and bus stations or drive to their destination. Two such EC developments are the recently launched Altura and Watercolours EC. Altura will be a 17-minute walk from the Bukit Gombak MRT Station, whereas Watercolours is 3 bus stops away from the Pasir Ris MRT.
Take note that while many ECs are not the closest to MRT stations, they may be located near LRT stations. For example, The Vales, an executive condominiums development, is a 3-minute walk away from the Cheng Lim LRT station.
With the construction of the Cross Island Line that commenced in the beginning of 2023, 8 out of 10 households in Singapore are expected to stand within a 10-minute walk of an MRT station. While Singapore is relatively well connected at present, for individuals who value easy access to destinations in the city centre and shorter commutes to their workplaces, this could be a significant downside.
Singapore’s Prime Residential Areas
Singapore’s central areas comprise districts that offer residents prestige and convenience with a range of amenities and entertainment hubs. Some well-known areas are Marina Bay, Tanjong Pagar, Orchard Road and Raffles Place. As these prime locations offer residents easy access to various amenities along with connectivity and proximity to major business centres, properties located here tend to have high values and are sought after by investors and homebuyers.
Prime Location Public Housing (PLH) Model
While prime locations are generally associated with various private housing property types, the Housing Development Board (HDB) aims to offer more affordable public housing to residents in the prime or central areas of Singapore through the Prime Location Public Housing (PLH) Scheme. The PLH model offers residents additional subsidies along with a longer Minimum Occupation Period (MOP) and certain restrictions on renting out flats.
Building More ECs in Prime Locations Through a Similar Model
Through a similar model to the PLH Model, the government could potentially offer residents executive condominiums in prime locations. These ECs will inevitably be priced higher than those in non-prime locations. However, to ensure that more residents can purchase these, the government can create stricter conditions, set an eligibility criteria and offer grants similar to the ones for PLH units. Additionally, according to a recent article by The Business Times, these prime-location ECs can come with a longer MOP period, stricter renting restrictions, and subsidy clawbacks.
Benefits of Building ECs in Prime and Central Areas
Aside from being able to purchase a home that will eventually fall under the private housing category, Singaporeans can benefit from having the option to purchase ECs in prime locations in various ways. Here are a few:
Convenience & Prestige
Prime locations are in close proximity to commercial and business amenities, entertainment hubs, various MRT stations and bus stops, and most workplaces. Moreover, the educational institutions, healthcare facilities and public services that are in prime locations are much more well-reputed and can offer significant advantages to families living in these areas. Building more ECs in such areas will give residents the opportunity to have a home in a well-connected area with accessibility to an enhanced quality of life.
Most locals who aspire to own private housing may also desire to own property in a prime location due to the perceived prestige and status symbol it offers.
Preventing Social Stratification
Developing ECs in prime locations can help prevent social stratification by further promoting inclusivity, offering equal access to amenities and opportunities, and reducing the widening wealth gap. Because ECs are much more cost-effective, and priced at approximately 25% less than new condos, individuals from diverse socio-economic backgrounds will be encouraged and supported to live in desirable areas by potentially purchasing ECs. More homeowners will be able to own private property in prime locations, more families will have access to the amenities and lifestyle offered in such areas (well-reputed schools, well-established malls and shopping centres, entertainment hubs, etc), resulting in fewer disparities.
Higher Property Values
ECs are a great investment opportunity as they increase in value over time. Prime locations often have limited availability of land, making the cost of land higher, aside from having the best amenities and infrastructure. The higher land cost contributes to potential capital appreciation for homeowners which can provide homeowners with generous returns on their investment. This also translates to a higher property value and the potential to sell at a higher resale price in the future.
However, we also must take into consideration the clawback that may come with the development of ECs through a model or scheme that keeps these homes affordable. While homeowners will have the potential advantage of seeing positive appreciation, this could still decrease the lottery effect and keep resale prices affordable.
Closing Thoughts
In summary, the benefits of developing executive condos in prime locations in Singapore cannot be understated. These projects not only have the potential to address the housing needs of middle-income individuals and families who aspire to own private property but also to improve the accessibility to amenities and opportunities that enhance the quality of life for Singaporeans. By unlocking the potential of prime locations, ECs can help bring about positive changes that can benefit the entire community.
We hope you have found the article insightful. If you are looking to purchase property or need any assistance on your property journey, feel free to contact us here. Stay tuned for more articles and as always, see you in the next one.
