When it comes to property investment in Singapore, homeowners often find themselves at a crossroads when deciding the right time to sell. For HDB flats, many consider selling right after fulfilling the Minimum Occupation Period (MOP). With private condominiums, some opt to sell shortly after the Temporary Occupation Permit (TOP) is granted. But for Executive Condominiums (ECs), the decision is unique. Should EC owners cash out at the 5th year mark, right after MOP? Or would it be wiser to wait until the 10th year, when the EC is officially reclassified as a private property? There’s also the option of holding onto the property as a long-term asset, riding out the market’s highs and lows.
This question of timing is pivotal because the classification of an EC changes over time, potentially impacting its value and market demand. Upon reaching the 10-year mark, an EC sheds its initial public housing restrictions, granting it private condominium status and making it available to foreign buyers. This reclassification could lead to a value appreciation as it enters the fully private property market, where demand and pricing dynamics differ from the public sector. Yet, many wonder if this anticipated jump in value justifies holding out for an additional five years.
Another layer of complexity in this decision is personal. Selling a property isn’t purely a financial calculation; it often requires a significant lifestyle change. For many homeowners, selling at either the 5th or 10th year mark means relocating, finding a new home, and possibly purchasing a pricier property in an inflated market. Alongside the sale, there are renovation costs and logistical expenses involved in moving, which may offset any profits from the initial sale. Homeowners must consider not only the potential profits but also the broader implications on their quality of life and financial stability.
Our analysis will explore how the median Compounded Annual Growth Rate (CAGR) of ECs generally changes between these two critical time points. We’ll examine trends in ECs across Singapore to understand the typical value trajectory from the MOP mark through to the reclassification at the 10th year. Are there identifiable patterns that support waiting for the full 10 years, or is the initial price spike after MOP sufficient for maximising returns?
In addition, we will delve into two case studies of EC projects that have gone through both the MOP and the 10-year reclassification. By analysing the financial outcomes of homeowners who sold at each milestone, we can assess which timing yielded better returns. These case studies will provide a clearer picture of the advantages and risks associated with each option, helping potential EC sellers make informed decisions.
Ultimately, the decision to sell at the 5th year mark, the 10th year mark, or to hold onto an EC indefinitely is not a one-size-fits-all answer. Each path has its own set of financial, personal, and market-driven factors. This article aims to provide insights that will help EC owners evaluate the pros and cons, taking into account not only potential profits but also the practicalities of timing, market conditions, and lifestyle impacts.
CAGR Based on the Number of Years Held After MOP
In order to answer the question that we set out in this article we would need to have information on how the price of ECs change across its lifespan. This would directly tell us whether the 5th and 10th year marks are indeed important time periods when it comes to realising profits. On the other hand, we will also need to know the EC TOP History in Singapore. This is because the number of ECs that are built each year differs greatly. Hence, the greater macroeconomic trend for the property market may have a strong impact on the gains posted by resale ECs.
The chart property investors often want to see is one showing a strong front-loaded appreciation, allowing for quick realisation of profits. However, with ECs, homeowners face unique considerations: relocation and renovation costs can diminish immediate returns, making long-term holding periods attractive for patient investors. These investors often hold onto their properties, allowing neighbourhoods to mature and infrastructure to develop, ultimately boosting the EC’s value over time.
According to the chart from our EC report, ECs tend to experience a steady increase in value over the years, with notable surges occurring at specific time intervals. For EC owners evaluating the best time to sell—either at the 5-year MOP mark or the 10-year reclassification mark—understanding these trends is crucial. The chart offers a clear visual of the median CAGR at each time period post-MOP, providing a basis for comparison to gauge potential returns at various points in time.
According to our EC report, the 0-1st year post-MOP emerges as the highest return period in terms of CAGR. This contrasts with the commonly held belief that the 10th year, when ECs transition to private condominium status, represents the optimal selling point. The following analysis explores how different holding periods perform and highlights the strategic significance of the 5th year.
CAGR Trends: The 1st Year Post-MOP Stands Out
Our analysis reveals that the 0-1st year post-MOP boasts the highest CAGR, reflecting the annualised rate of return for EC owners. This peak profitability is attributed to a combination of limited resale supply, pent-up demand, and strong buyer interest as ECs solidify their position in the resale market.
1. Highest Growth in the First Year (Peak)
The CAGR is the highest in the 0-1 year period at 4.87%. The first-year boost is typically associated with the release of ECs into the private market, which can result in immediate price appreciation.
2. Fluctuations Between 1-7 Years (Slower Growth)
From the 1-10 year range, the CAGR remains relatively consistent, fluctuating between 3.56% and 4.19%. However, it is noteworthy to mention that at the 3-4 years mark, the CAGR dipped from 4.02% to 3.56% despite the ECs approaching full privatisation.
3. Secondary Peak in 7-8 Years Post-MOP (Secondary Peak)
A secondary peak is observed in the 7-8 year range, with a return of 4.19%. This could reflect favourable market conditions or the impact of ECs being fully privatised, making them more attractive to a broader pool of buyers.
4. Decline After 8 Years (Stagnation Risk)
After the 10-year period, the CAGR starts to decline, reaching its lowest point at 2.36% between 15-16 years post-MOP. This drop can be explained by the shorter remaining leases of ECs and increasing competition from newer developments, which could slow down the rate of price appreciation for older projects.
5. Rebound in Long-Term Holding Periods of 17-21 Years (Rebound)
The CAGR begins to rebound after 16 years, increasing from 2.52% at 16-17 years to 3.46% at 20-21 years. This rise could be attributed to market conditions favouring long-term real estate investments which has resulted in appreciation in the broader property market driven by inflation and economic growth over the long term. Additionally, this timeframe is particularly relevant for ECs that attained MOP in the early 2000s. 20 years after their MOP marked the onset of the COVID-19 pandemic, which saw housing prices surge to unprecedented highs.
ECs follow a distinct life cycle pattern when we use CAGR over the course of 0 to 21 years after MOP, characterised by Peak → Slower Growth → Secondary Peak → Stagnation Risk → Rebound phases, before lease decay effect starts to kick in the longer-term. Similarly, the rebound period is more relevant to older ECs (those launched before 2006), as housing prices for these ECs increase over time alongside inflation and economic growth.
The EC TOP (Temporary Occupation Permit) history chart illustrates distinct supply fluctuations over the years, highlighting significant completion spikes in 1999–2000 and 2015–2018, with a peak in 2016.
Between 1999 and 2000, the government ramped up EC supply to address the housing needs of middle-income households, bridging the gap between HDB flats and private properties. In contrast, the surge in 2015–2018 reflected efforts to stabilise the market, which had been affected by escalating private property prices driven by robust demand and speculative investments.
Impact on Private Housing Prices
These periods of increased EC supply played a critical role in meeting pent-up market demand. By absorbing some of the demand for private housing, EC completions helped to moderate private property price growth. This strategic supply shift provided middle-income households with an attractive housing option, reducing the pressure on private residential markets.
However, the influence of macroeconomic policies is also critical. Cooling measures implemented between 2010-2024 aimed to control property price spikes but slowed appreciation for some ECs in their early years. Infrastructure developments also play a significant role in influencing property values. ECs located in areas that have seen the addition of new MRT lines, schools, or commercial hubs after completion often benefit from increased demand and appreciation over time. These improvements can gradually enhance property values and may make a longer holding period advantageous for properties situated near new or ongoing developments. However, this impact varies on a case-by-case basis and requires a detailed analysis of the Master Plan to assess how future developments could potentially affect the surrounding region.
Case Study on Bishan Loft
Bishan Loft is a highly successful EC project often cited as an exemplar in the EC market, known for its strategic location and robust resale performance. Situated in Bishan, a central and well-established residential area with excellent transport links, reputable schools, and ample amenities, Bishan Loft has consistently attracted strong demand. This demand is reflected in the data, which shows a remarkable 210 profitable transactions against only 5 unprofitable ones—a testament to its solid fundamentals and location appeal.
The chart shows the average transacted prices for different unit types at Bishan Loft, including 3-bedroom, 4-bedroom, penthouse units, and other configurations. Since its TOP in 2004, Bishan Loft has exhibited steady appreciation across all unit types, with notable increases in value around 2010 (0-1st year post-MOP) and again from 2010 (5-6 years post-MOP) onwards. Penthouse units (shown in yellow) have maintained a consistently high price trend, peaking above $2 million, while 4-bedroom units (blue) also follow a strong upward trajectory. This appreciation is indicative of the premium buyers are willing to pay for larger units in central locations like Bishan, especially as private property prices have climbed in recent years.
One significant factor driving Bishan Loft’s success is its buyer demographic. Approximately 55% of the buyers were HDB upgraders, while the remaining 45% were former private property owners. This balanced mix likely fuelled demand, as HDB upgraders viewed Bishan Loft as an attractive pathway to private property ownership in a central location, while private property owners were drawn to the affordability and value offered by the EC. This diversity in buyer background helped support the resale market, contributing to Bishan Loft’s resilience and consistent profitability, even during market fluctuations.
Over time, Bishan Loft’s location in a matured town has only enhanced its appeal. Bishan boasts excellent transport connectivity, including an MRT interchange, which has positively impacted property values as residents benefit from ease of commuting. Additionally, the presence of reputable schools, such as Raffles Institution, and proximity to shopping centres and recreational facilities have made Bishan Loft highly desirable for families. These locational advantages have supported sustained demand, resulting in consistent price growth for units held over a longer term, as seen in the steady upward trend in the chart.
The data indicates that Bishan Loft owners who held onto their units and sold it upon MOP experienced the highest rate of returns relative to other time periods. However, beyond the initial MOP, owners have once again reaped significant gains in the 5-6 year post-MOP, aligning with the period when the EC becomes fully private as the property’s appeal expanded to a wider pool of potential buyers, including foreigners. This increased demand, combined with Bishan’s location advantages, helped push up prices further, creating highly profitable resale opportunities.
Case Study on Yew Mei Green
In contrast to the highly profitable case of Bishan Loft, Yew Mei Green, which attained TOP in 2000, shortly after the 1997 Asian Financial Crisis. This project represents a more challenging EC investment with a significant number of unprofitable transactions. Located in Choa Chu Kang, an area further from the city centre and less established than Bishan, Yew Mei Green has seen mixed performance over its history. Out of its transactions, 150 were unprofitable, while 545 yielded profits. This higher ratio of unprofitable transactions highlights some of the challenges associated with ECs located in less mature, further-out neighbourhoods.
The chart for Yew Mei Green shows the average transacted prices for 3-bedroom and 4-bedroom units, reflecting a less consistent upward trend compared to Bishan Loft. Price growth at Yew Mei Green has been more volatile, with noticeable fluctuations over the years. In particular, there were periods around 2005 and again between 2012-2015 where prices dipped or stagnated, reflecting limited demand and competition from newer developments in surrounding areas. This volatility, coupled with the property’s location further from central Singapore, made it harder for owners to achieve strong resale gains.
The case of Yew Mei Green is not unique. Thirteen other EC projects also experienced one or more unprofitable transactions, primarily due to the broader macroeconomic environment. Between 1998 and 2000, Singapore was recovering from the 1997 Asian Financial Crisis, during which private residential prices surged by 40%. Homeowners who purchased ECs launched between 1999 and 2000 did so at relatively high prices, coinciding with the peak of this market rebound.
However, the property market, including ECs, faced declining demand during subsequent adverse macroeconomic events. The dot-com bubble burst in 2001, followed by a slow recovery, and finally, the significant impact of the Global Financial Crisis between 2007 and 2009. As a result, resale prices stagnated or even declined during this period, leaving EC owners who had bought at peak prices struggling to sell their properties at a profit.
This highlights the importance of entering the market at the right price point and having a strong understanding of property cycles. Timing is key to avoiding periods when prices are inflated, which can lead to challenges in achieving profitable returns.
Other factors include Yew Mei Green’s location in Choa Chu Kang, which also plays a significant role in its performance. Unlike Bishan, which is centrally located with well-established amenities, Choa Chu Kang is further from major commercial hubs and has taken longer to mature. While transport links have improved over time, including MRT connectivity, the area still lacks the same level of access to premium schools, shopping centres, and business districts that make properties in central locations more desirable. As a result, Yew Mei Green’s price growth has lagged behind ECs in more developed neighbourhoods, impacting owners’ ability to realise strong gains at the 5- or even 10-year marks.
For Yew Mei Green, holding beyond the 10-year mark remains a viable strategy, especially as the area continues to mature. However, this requires patience, as the less favourable location means that appreciation is likely to be slower and more dependent on continued infrastructure and amenity development in the region.
Yew Mei Green serves as a case study illustrating the challenges faced by ECs met with an unfavourable macro environment alongside its location in less central, emerging neighbourhoods.
Closing Thoughts
Through case studies of Bishan Loft and Yew Mei Green, we illustrate how macro environment, alongside location, buyer demographics, and neighbourhood maturity play significant roles in determining optimal resale timing. Bishan Loft, in a centrally located, well-developed area, saw consistent price appreciation and few unprofitable transactions, making both the 0-1 and 5-6-year mark post-MOP strong choices for profitable resale. Yew Mei Green, in a less mature neighbourhood, worsened by unfavourable macro environment showed more volatile price trends and a higher rate of unprofitable sales, suggesting that longer holding periods might yield better returns for projects with high entry prices (often hit by unfavourable macro conditions).
Furthermore, extended holding periods for projects will almost definitely lead to price growth, primarily driven by inflation and supported by enhanced infrastructure surrounding the property in the context of Singapore. These factors contribute to steady appreciation over time, particularly in well-located projects.
However, this growth is not indefinite. As the property ages, the lease decay effect becomes a significant factor, gradually eroding its long-term value.
One clear takeaway from our analysis is the noticeable spike in the annual rate of growth immediately after MOP. This surge is largely attributed to the Volume Effect, where pent-up demand and limited resale supply in the market create a sharp increase in value during this period. Understanding this dynamic is essential for owners seeking to time their resale for optimal returns.
Have more questions about navigating the EC market in the current landscape? Do reach out to our team of experienced consultants here and we’ll be glad to advise with personalised consultations for your property journey. As always, see you in the next one.
