Average size of ECs have become smaller over the years ...

By The Folks @PropTalk - February 22, 2015 No Comments
The average size of executive condominium units has become smaller over the years, say property analysts. And the trend is likely to continue as developers struggle between maintaining their bottom lines and keeping units affordable for buyers.

Executive condominiums (ECs) were introduced about 20 years ago, and since then, unit sizes have been shrinking.

According to property firm SLP International, the average size of a three-bedroom unit ranged between 1,200 and 1,300sqft when the first batch of ECs was launched in the 1990s. But it has since gone down to less than 1,100sqft in the last five years.

Data provided by Savills Singapore showed a similar trend. The average size of an EC unit "was about 1,200 to 1,300sqft for those launched in the era of 1990s", said Alan Cheong, senior director of Savills Singapore's Research and Consultancy team. "Today, we are getting about 1,050 to about 1,200. So the range has already shifted down."

Nicholas Mak, executive director of research and consultancy at SLP International Property Consultants, said: "The main reason is really profit motivation. In order to increase the price per square foot and still keeping the price quantum at a fairly affordable level for EC buyers, developers are actually reducing the size of the EC units."

Some property analysts say the units are likely to get smaller. Not just that, there are now two-bedroom units. The two-bedroom units entered the market as early as 2005, according to property analysts. And today, some measure about 700sqft each.

EC developers are not required to keep to a minimum size for each unit, although there is a cap on the maximum number of dwelling units allowed in a project. The number is calculated through a formula based on the site area of the EC development.

But analysts say there is a limit to how small units can go. "Because ECs are more for own use - for the first five years' minimum occupation period. And then to build anything smaller, developers will be taking risks that buyers there are not going to start an average family with children, or even with a maid. So building more two-room units will be pushing the limits and they are going into uncharted waters," Mr Cheong said.

Analysts say most EC buyers have children and are currently living in an HDB flat, and they are likely to go for units that are under $1 million. This is because the household income of EC buyers is capped at $12,000 a month.

In addition, with the introduction of mortgage servicing ratio rules in 2013, those who purchase EC units directly from developers can only borrow up to 30% of their monthly income. And those who have an HDB flat and want to buy an EC unit at future launches, will also be required to pay a levy of up to $50,000.
Source: CNA

The wife and I would have thought that the "shrinking EC" phenomenon over the past few years (and going forward) is a given, as such projects are built by private developers. Since we have already seen smaller and smaller condo units being built over the years primarily for profit reasons, why should the EC market be any different?

And contrary to professional belief, we reckon that unless the government steps in with added regulations on EC unit sizes, developers will continue to build smaller and smaller units as they have done with private condos. This is based on two premises:

1. The continual belief of most homeowners that migrating from a HDB to an EC is a "step up" on social status - irrespective of the fact that their liveable space is actually reduced, sometimes quite substantially.

2. The notions of DINKs (Double Income No Kid) or "small nucleus family" - 1 kid plus a domestic helper so at most 4 people living under one roof in total - are very deeply entrenched in those who are getting married/starting a family these days. So they might feel that a 1- or 2-bedroom unit is all they need, especially given the myriad of facilities (and not to mention prestige) that an EC provides over your typical HDB flat.


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