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Why are newly launched Executive Condominiums in Singapore a good stepping stone to wealth creation?

Singaporeans have a long-standing love affair with owning private property. What if there is a way to buy a private property, complete with government grants?

Enter Executive Condominiums (ECs).

With a 99-year leasehold, Executive Condos in Singapore are a hybrid mix of public and private housing. They are built and managed by private developers, with the land costs subsidised by the government. This is why they are cheaper than private condominiums, despite having the same facilities such as swimming pools, gyms, and function halls.

The only catch – an EC is subjected to public housing rules like the Minimum Occupancy Period (MOP) of five years. It is also only officially recognised as private property after 10 years.

Who Can Buy An Executive Condominium (EC) in Singapore?

According to HDB, you can apply for an EC only if you meet the following criteria:

You are a Singaporean citizen and at least 1 other applicant must be a Singapore Citizen or Singapore Permanent Resident

You qualify for one of the schemes (Public Scheme, Fiancé/Fiancée Scheme, Orphans Scheme, or Joint Singles Scheme);

Your household income is not above S$14,000;

You have not owned any property, locally or overseas, in the last 30 months and you do not own any property now; and

You have not owned more than one HDB/DBSS or EC flat previously

After you’ve ascertained that you qualify for an EC, let’s take a look at why newly launched executive condominiums are a good stepping stone towards wealth creation, especially for first time buyers.

Why Is An Executive Condominium (EC) in Singapore A Good Stepping Stone Towards Wealth Creation?

1. Appreciation of property and higher rental yield

Buyers of newly-launched ECs are almost always guaranteed an appreciation of their property. Prices of ECs’ per square foot (PSF) have appreciated by 133 per cent since 2014 compared to HDB flats.

Given the recent rising resale HDB prices, many HDB resale flat owners who sold at a profit are looking to upgrade. This provides a steady supply of prospective buyers who can buy your EC after it reaches its MOP.

Also, the price gap between a private condo and a nearby EC is substantially narrowed after the latter has met its 5-year MOP, according to a research conducted.

For owners looking to rent out their ECs after its MOP, ECs have on-site facilities that are the same as private condominiums, which then yields better rental rates compared to resale HDBs

Also, after the 10th year when it is recognised as private property, sellers are no longer bound by HDB’s restrictions on selling. This means the entire EC can be sold to foreigners, widely increasing the pool of prospective buyers.

This makes ECs a good investment vehicle for Singaporeans and PRs looking to earn some profits or passive income.

2. More affordable

The price of a newly launched EC is cheaper than private condominiums but includes all of the same facilities like swimming pools, gyms, and function halls. This means owners can have a bigger profit margin when they sell their ECs since they buy the property at a significantly lower cost.


On top of that, first-time home buyers can make use of HDB grants such as the Family Grant and Half-Housing Grant to make their EC purchase even more affordable.

Family Grant: The grant amount ranges from $10,000 to $30,000, with an income ceiling of up to $16,000.

Half-Housing Grant: The grant amount is basically half of the Family Grant, if one of the buyers is a first-timer and the other is a second-timer applicant.

However, the disbursed grant money must be returned to the buyer’s CPF account together with accrued interest when the EC is sold.  

According to HDB, individuals are considered a first-timer buyers if they have not received any housing subsidy from HDB before such as:

Be the owner of a flat bought from HDB

Have sold a flat bought from HDB

Have taken the CPF Housing Grant to buy an EC, Design, Build and Sell Scheme (DBSS) flat or an HDB resale flat, or taken over ownership of such a flat or EC

Have transferred the ownership of a flat bought directly from HDB, or an HDB resale flat bought with a CPF Housing Grant

Have ever taken other forms of housing subsidy, such as Selective En bloc Redevelopment Scheme benefits or privatisation of HUDC estate

 3. Don’t need to pay Additional Buyers Stamp Duty (ABSD)

The Additional Buyers Stamp Duty (ABSD) is a pain for those who are looking to invest in properties in Singapore.

ABSD is levied based on the valuation or the selling price of the additional property bought, whichever is higher. It is levied on top of the Buyer Stamp Duty.

For HDB upgraders who are looking to buy ECs, you’ll be glad to know that there is no need to fork out the extra cash needed for the ABSD. This is unlike prospective buyers of private condos where upgraders have to pay the ABSD first and apply for remission later.

Limitations of Executive Condominiums (ECs)

1. Strict rules on renting or selling for a period of time

Since they’re not considered fully private till after 10 years, ECs are subjected to the HDB’s housing rules such as the MOP.

Owners are not allowed to rent the entire EC out during the first five years. Thereafter from the sixth to tenth year, the EC can only be sold to Singaporeans and Permanent Residents (PRs). After the tenth year, the EC can then be sold to foreigners.

This is bad news for owners who wish to cash in on their new property quickly. You’ll be expected to stay for at least 5 years, unlike private condominium owners who can sell their property at any time.

2. May still be unaffordable for some individuals

In 2021, developers are raising the prices of ECs given the robust demand. Though they are 20 - 30% cheaper than private condominiums, ECs may still be out of reach for some individuals.

Buyers of ECs also cannot use the HDB Concessionary Loan. They must take up a bank loan and cough up the 25% down payment, 5%  of which must be in cash.

The stricter Mortgage Servicing Ratio (MSR) applies to buyers of ECs. The MSR must be within 30% of your gross monthly income. This means that your monthly mortgage payments cannot exceed this percentage. The loan amount obtained under MSR guidelines may be lower as compared to the loan amount governed by TDSR. 

Read: Important Home Loan Factors to Consider: Are you ready to commit to a home loan in Singapore?

3. Grants must be refunded back to CPF

Once you sell your EC, you’ll have to pay back the grants you received back into your CPF, including the accrued interest of 2.5% per year. 

So Is An Executive Condominium (EC) In Singapore A Good Buy?

After considering the pros and cons of ECs, they are most recommended for the following individuals:

Buyers who don’t qualify for Built to Order (BTO) flats as they have exceeded the maximum household income ceiling of S$12,000 yet cannot comfortably afford a private condominium at the moment;

Buyers looking for affordable properties with full condo facilities; and/or

Buyers who don’t mind staying for at least five years in the EC

Ultimately, whether an EC is a good buy is subject to other conditions such as the location of the property, the surrounding supply, and the past rental yields.

Shopping for a new Executive Condominium in Singapore?

At Mortgage Consultancy, you’re sure to get the best rates and packages of home loans across 16 banks in Singapore. Contact us today at +65 8556 5271 to get the most suitable bank loan according to your needs. Free consultation and application services provided.

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