Prices of Executive Condos have risen sharply over the years, with some even seeing close to 100% increase in price over the last 10 years. With average costs of around $750 psf back in 2013, some executive condos have risen to over $1,300 psf in 2024.
Seeing how much executive condo prices have grown, many have asked, is buying an Executive Condo a more profitable option than a Private Condo?
So, let us take a look at a case study of two similar projects, one is the Executive Condo Lush Acres while the other is the nearby Private Condo River Bank @ Fernvale, both were launched just 6 months apart.
We take a look at two of the recent transactions for these projects. Both units are on the 8th floor, with similar size, both are 3-bedder, and held for approximately 10 years before being sold.
Comparison of Executive Condo and Private Condo
1st project
Lush Acres Executive Condo: Launched around August 2013. A recent 3-bedder was sold in Dec 2023 for $1.43 million ($1,307 psf). The seller had bought it for $827,200 ($776 psf) in Oct 2013. This is a 68% gain over 10 years!
2nd Project
Riverbank @ Fernvale Condo: Launched around Feb 2014. A recent 3-bedder was sold in Dec 2023 for 1.43 million ($1,320 psf). The seller had bought it for $1.042 million ($998 psf) in Mar 2014. This represents a more modest gain of 32% over 10 years.
In fact, there were more recent transactions in both projects that exhibited similar trends. Looking at how these two projects performed, the Executive Condo is a more superior option than a Private Condo.
Incidentally, Stacked Homes wrote an article that found that the 31 most Profitable Private Condos over the last 10 years had a profit margin of between 20% – 35% depending on the years held. Separately, EdgeProp published an article that shows that Executive Condos that were held for more than 8 years have profits between 45% – 70%.
RESTRICTIONS
However, buying an Executive Condo comes with some restrictions. For one, there is a Minimum Occupation Period (MOP) of 5 years, where you have to stay in the unit for the first 5 years before being able to sell it (compared to Private Condo where you can sell the unit anytime after purchase). Also, after the MOP, you can only sell the EC to Singapore Citizens or Permanent Residents.
The EC will become fully privatized after 10 years with no restrictions on who you can sell to.
Unless you are specifically targeting Foreign buyers, this would not matter. With the current additional buyer stamp duty for foreigners at 60%, they are probably not the best target buyers.
In addition, there is an EC income ceiling of $16,000 (combined income) when applying for the EC.
Remember: In investment, you make money when you buy, not when you sell. Your entry price will determine whether you are going to profit.
Whether you are buying an EC or Private Condo, you will need the best deals for your home loan. You can connect with one of our mortgage experts who can help you do a complimentary assessment of your situation. You can contact us via the links below: