Developers are showing strong interest in the North Gaia landsite
North Gaia was subject to intense competition from developers. There were 7 bidders competing for the site. It was ultimately awarded to Sing Holdings Limited at a tender price $373.5 million. This is $576 per square feet per price ratio (psf per price ratio).
The last EC launch was in Yishun in 2015. The projects were Signature at Yishun (525 units), and The Criterion (505 unites). There were 6-8 bidders competing for the respective sites.
The written permission was obtained from URA and indicated that North Gaia has 616 units. This is more than any previous EC launch.
Launch of EC units is becoming slower
While it seems like there has been an increase in the number launched EC units in recent years, the actual number of projects each year remains low. There were 1,609 units launched in 2021.
This was due to 3 projects: Parc Central Residences and Parc Greenwich. These projects have sold between 80-90% and 90% of their units as of the writing of this article. Due to the scarcity of EC units, there is usually a strong demand.
Lower land sales prices for ECs
An EC site is generally more expensive than a regular condominium. We can see that the land prices for EC sites are higher than condo sites in the Outside Central Region (OCR), according to our analysis of recent sites under the Government Land Sales program (GLS).
An EC site’s average land sale price is lower than a condo. An example: The average land sale price for an EC site in 2021 was $631 psf ppr, compared to $1,195 psf ppr of a condominium. The difference in prices between these two types of sites is $563 per square foot.
Developers can pass along their savings by lowering the price of EC projects. As you can see, this is possible.
ECs are usually sold at a lower cost.
We compared the prices of ECs to condos in the OCR section. We chose condos in OCR to compare because ECs often reside in these segments. It will be a more fair comparison to see these prices.
Our research shows that ECs sell at a lower average price than condominiums. The reason ECs have lower prices than other private properties is that developers can enjoy lower land bid costs.
Price appreciation of ECs
An additional advantage to purchasing an EC is the potential capital appreciation that it offers over time.
We compared EC project prices from 2012 with their resale values in 2021. It is clear that 5 of the projects on the table have seen price appreciation over time.
From 2012 when the project was sold, to its resale in 2021, the average price went up 40%.
Signature At Yishun, and The Criterion were both launched in ECs in Yishun before. Both have seen a significant price increase over the years.
Signature At Yishun launched in 2015 at a unit price average of $773 psf and was subsequently sold for $942 psf. This resulted in a 21.9% increase in the price of the development.
The Criterion launched in 2015 at an average price $796 per square foot and was sold for $955 per square feet in 2021. The price of the Criterion also increased by 20.0%. The projects were both sold within three years of their launch.
Outlook for North Gaia
North Gaia will be the first new executive condo (EC) that is set to open in 2022. We will explore its location, the price trends and reasons why it is a good investment.