From ‘Khaw to developers: Don’t forget intent of ECs’, 24 Nov 2012, article by Esther Teo, ST
DEVELOPERS have been warned not to forget the fundamental premise of an executive condominium (EC) even as they fall over themselves to offer luxurious finishings to attract buyers. National Development Minister Khaw Boon Wan said they should remember the policy intent of ECs: to help Singaporean families earning $12,000 or less a month buy a condo for a price under the market rate.
In a blog post yesterday, Mr Khaw reminded developers that land prices for ECs are lower than prices of private condo land. This is done through the zoning and tendering out of the land earmarked for EC projects. Mr Khaw’s post came on the back of reports about a string of ECs sold at sky-high prices. A 2,845 sq ft penthouse at Heron Bay in Upper Serangoon Road, for instance, was sold for $1.77 million last month. And the upcoming CityLife @ Tampines will offer a 4,349 sq ft “presidential penthouse suite” that is likely to cost more than $2 million.
“I expect the developer to have done his calculations, to ensure that the unit will be affordable for the targeted EC applicants,” Mr Khaw said. While EC developers have flexibility in designing and pricing their units, they “must be mindful that flexibility must be exercised in keeping with the intent and spirit of the EC policy”, he warned.
Introduced in 1995, the ‘fundamental premise’ of the EC scheme was to meet the aspirations of the ‘sandwiched class’ who cannot afford private condos but do not qualify for public housing due to income ceiling requirements or wish to upgrade to a semi-luxurious apartment. If you consider the ‘intent and spirit’ of public housing in general, according to the HDB vision statement, it is to ‘provide affordable homes of quality and value‘. Just recently a Queenstown flat was sold for almost the same price as a EC penthouse at slightly more than $1 million. Khaw Boon Wan not only didn’t wag his stern finger at such resale pricing then, but coolly told buyers not to be ‘traumatised’ by the million dollar price tag of a HDB flat. In the early 2000s, ECs were considered good investments, and with the first-timer $30,000 grant you could snare pseudo-condo living for $390,000. Can the ‘sandwiched class’ even afford million dollar HDB flats these days, not to mention ECs?
According to an ST feature on CityLife@Tampines’ presidential suite, it could easily accommodate four 5-room HDB apartments, which is almost twice the size of the Heron Bay’s five-bedroom penthouse worth 1.5-1.6 million. The latter was touted as the ‘first’ for an EC development. But you could also live in the lap of luxury simply by sprucing up your HDB flat into a ‘penthouse maisonette’, sell it for more than a million and get a landed property bypassing the EC route altogether. The million dollar EC is nothing new. In fact, $1.1 million was paid for a Pinevale EC in 1997. That’s TWO years after ECs were launched.
So just how massive is 4349 square feet, or about 404 sq meters of ‘presidential’ penthouse living in City@Tampines? Here’s a comparison:
- 8 x shoebox apartments (50 sq m)
- 7 x 3-bedroom condo unit at Natura (635 sq ft)
- 2 x Fullerton Bay Presidential Suite (2000 Sq ft)
- 1 x the floor space of Air Force One (4000 sq ft)
- 1 x Watsons store in Marina Square (4000 sq ft)
- Almost the size of a basketball court (4700 sq ft)
- An MBS Presidential suite is 504 Sq m
With skyhigh pricing narrowing the gap between public and private housing, is the ‘spirit’ of ECs still relevant? In 2002, calls to scrap the scheme by the ERC were rejected by then MND Mah Bow Tan. 10 years later some Singaporeans remain unconvinced that the ECs were really being purchased by their intended targets, or that using taxpayers’ money to subsidise these buyers would be put to better use helping the disadvantaged or those just looking for a roof over their heads rather than a private jacuzzi or having an address with a fancy @ symbol or a description of a body of water in it (Bay-, Sea-, Water-). The Heron Bay penthouse was reportedly bought by a ‘young couple’ who are also first-time property buyers. Considering that the household income cap is $12,000, the only logical conclusion is that these people come from wealthy families, and having a $30,000 subsidy helps too. Sandwiched class? The kind of sandwich with prime Wagyu beef and foie gras, perhaps. Maybe the Ministry should review the the ‘intent and spirit’ of basic HDB housing first, before turning their attention towards profiteering EC developers.
Why buy an expensive sandwich when you can have a proper burger
Postscript: ($2m Tampines EC penthouse sold in two hours, 30 Dec 2012, Sunday Times) Tampines’ Citylife penthouse eventually sold for 2.05 million to a certain Ms C.Koh, who together with massive chipping in from her businessman father, bought the suite for her brother and wife. The whole family of 7 intends to move in. When questioned about the debate on EC prices, she said: “Why is there controversy? We’re just a middle-class family.” I’m not sure if this equates to being ‘sandwich’ class, but anyone who is a beneficiary of family finances and already an owner of a ‘presidential penthouse’ before 30 belongs to a WEALTHY family in my opinion, ‘middle-class’ or not. Also, no one is going to say “We’re from a high-income family’ on the national paper. It’s either a case of overbearing modesty, or a different interpretation of the term ‘middle-class’.
In 2008, ex NMP Siew Kum Hong defined the middle class as the ‘middle 60% of the population by income’, which ranges from the ‘lower’ middle class earning $2590 monthly (in 2005) to the top one-third earning $6575. The father of the penthouse owner himself admitted that his ‘son can’t afford it, he’s only a salaried employee’. Therein lies the ‘controversy’; that you’re entitled to HDB grants as long as you fall within the income bracket, when you could jolly well own private property so long as your rich Daddy helps out. And where do grants come from? Taxpayers who can’t afford condo living, that’s where. Is the EC system targetting the right ‘class’, or just offering discount savings for people who can easily own bungalows instead?
Filed under: 2012, HDB, Money, Politicians Tagged: | HDB, Khaw Boon Wan, Money, Politicians
The queenstown flat was resale