Thursday, January 3, 2013

Review of EC market may be in the works


This follows confusion over Forestville's launch without URA's approval to sell
Business Times
JANUARY 01, 2013

The executive condominium (EC) market could be coming under review, analysts said, in the wake of confusion over the launch of the Forestville project that is believed to be linked to the size of its penthouses.

The development in Woodlands was launched for balloting last Friday despite not having the approval of the Urban Redevelopment Authority (URA) to sell the units.

In a statement released on Saturday, Hao Yuan Investment, the developer, said that there were no sales bookings. It had instead gotten potential buyers to make an Expression of Interest (EOI). No fees were to have been collected, and the developer said it would honour any arrangement from the balloting exercise.

An analyst noted that getting EOIs is not uncommon, but thinks that in this case the developer may have "jumped the gun" in reaction to strong demand before confirming approval.

Business Times understands that there were concerns over the size of the penthouses at the 653-unit project.

Forestville, developed by Hao Yuan and managed by MCC Land, will have 29 penthouses ranging from 1,550 sq ft to 2,756 sq ft.

Some analysts said that the situation at Forestville could signal a revision or introduction of measures.

Large penthouses are a controversial matter, said one analyst. Some of the units, which he called "super large ECs", are in excess of 2,000 to 2,500 sq ft. They are generally offered at a lower per sq ft price, which raises some issues, he said. "The provision of super large units, which is at the discretion of developers for usual housing projects, isn't appropriate for ECs. Furthermore, it seems to make 'subsidized' housing available for buyers of large homes, who in any case, doesn't seem to have affordability challenges. Luxury project concepts like premium facilities and themes are more appropriate as it benefits all the EC buyers, but not quite so for provision of large units."

He foresees one possible measure in the form of a cap on the size of EC units that are over 2,000 sq ft. The authorities can also withhold permission for projects with these large units, he said.

Lee Sze Teck, senior manager for training, research and consultancy at DWG, said that it may also be time to look at a lack of an extended family income ceiling for ECs, which stands at $15,000 per month for Housing and Development Board units, versus the flat $12,000 per month for ECs.



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