SINGAPORE - The executive condominium (EC) market is facing a potential supply glut as the government rolls out a record number of EC sites.
A total of 25 EC sites (from both Confirmed and Reserve list) were released to the market via the Government Land Sales (GLS) programme between H1 2010 and H2 2012.
This year, 11 sites were put on the Confirmed List (one site was moved from the Reserve List in H1 2012 to the Confirmed List in H2 2012).
The site at Upper Serangoon View/Upper Serangoon Road (developed into Heron Bay) has since been launched for sale.
Of the remaining 10 EC sites, five have been sold and are awaiting developer's sales launch.
The remaining five have not been launched yet for sale under the GLS programme, or are waiting for the tender period to close.
Some 5,600 units from these 10 sites are expected to come on stream by end-2013, which translates to an average annual supply of 4,500 units, said Ong Teck Hui, national director, research and consultancy, at Jones Lang LaSalle (JLL).
By comparison, the average annual supply over the last two years has been about 3,600 units, with average take-up of 3,300 units.
"Viewed from this perspective, the oncoming supply is at a faster rate than the past. Assuming demand remains stable, the projects being marketed would face greater competition ... It's likely to be more of a buyer's market given the wide range of projects coming on stream with the possibility of prices being more competitive," said Mr Ong.
Location is another key factor, said Png Poh Soon, head of research at Knight Frank Singapore. "Certain locations may see heightened caution from developers arising from strong competition from existing unsold and uncompleted mass-market condos and EC developments."
In Pasir Ris, for instance, adjacent condominium developments, such as Sea Esta, Ripple Bay, Watercolours (EC), and Seastrand still have about 385 unsold units in August 2012, noted Mr Png.
There is also the record allocation of some 27,000 Built-to-Order (BTO) flats to contend with.
"Some (home-buyers) are becoming more prudent as the global economy slows down ... (these buyers) may defer their upgrading decisions, or opt to go on a safer BTO option, particularly for first-timers," said Mr Png.
That BTO flats are significantly cheaper than EC units - even though both are subject to the same Housing Board rules - may push potential buyers towards BTO flats.
Said Savills Singapore's head of research, Alan Cheong: "The upper limit pricing for Waterway Sundew at Punggol ranges from $310-$373 psf built-in. The gap of about $400 psf (for ECs) is quite substantial."
Potential buyers have to fulfil certain criteria, too.
For instance, their combined household income must fall below $12,000 and they must be a married Singaporean couple.
"Given the increasing supply of EC sites, developers may turn in conservative bids to account for these constraints," Mr Cheong said.
The fact that dual ownership of a HDB unit and EC is not allowed also limits the pool of buyers.