Important: If you are waiting for the Sumang Walk Executive Condo (EC), you have to be careful. Please take note below are simply my best guess estimates. 

I recently met with quite a few readers whose flat has already hit the 5-year MOP.

Many of them were telling me they were waiting for the launch of the Sumang Walk EC by CDL.

To the typical agent – this is good news. Why? We have ready buyers who are ready to close on an Executive Condo unit.

Most of the time, we don’t even need to sell their HDB first.

They only need to book and buy the EC first. They can then sell the HDB only when closer to the key collection date.

But why I raise the red flag about Sumang Walk EC?

It is not because that they are not good.

I simply feel that there are much better products out there. But you need to be open enough to explore all the other choices.

#1: Mortgage Servicing Ratio (MSR)

If you wish to purchase an EC, you will need to consider the MSR.

The Mortgage Servicing Ratio (MSR) framework limits how much of one’s gross monthly income that can be used to service a home loan.

Under the MSR framework, a buyer can only use up to 30% of their gross monthly income to repay their loans. This is applicable only in cases where the borrower is purchasing HDB flats and ECs.

For example, if you are in your 40s and you have a monthly household income of $10K.

The maximum loan you are able to get is only $600K.

If you are getting full maximum loan of 75%, then you are only able to get an EC unit that costs $800K.

#2: Estimated Launch Price Is About $1150 PSF

My estimated launch price is derived from the land price of $583 PPR.

Based on my calculations, the developers will need to minimally sell at about $1150 PSF.

How did I calculate this?

I based on:

• Rio Casa enbloc at $706 PSF PPR and launched as Riverfront Residences – sold at average $1307.
• Tampines Court enbloc at $676 PSF PPR and launched as Treasure at Tampines – sold at average $1280.
• CDL bought the West Coast Vale land plot at $800 PSF PPR and launched it as Whistler Grand at $1380 PSF PPR.
• The Woodleigh land plot was sold at $1100 PSF PPR and launched as Park Colonial at $1750 PSF.

They are all around $600 PSF more from the land price.

So if Sumang Walk EC were to sell lower, the developer might be losing money!

Otherwise, this means that Riverfront Residences (by Oxley) and Treasure At Tampines (by Sim Lian) is making more profits – even in a market where most buyers are at the sidelines.

If I use $800k / $1150 PSF = 695 sqft

For this size in the market – this means it should only be a 2-room unit. The maximum it can go to is a 2-room plus study.

This means you can only be getting a 2 bedroom at that Sumang Walk EC.

If you want 3-bedrooms, the developer should build around a 900sqft unit.

900sf X $1150 PSF = $1.035 Million

So to buy a 3-room EC and assuming you can only get $600k loan – this means you will need a downpayment of $435K Cash & CPF.

That is really a lot of money. That actually excludes the stamp duties you might need to pay as well.

Do take note if you are upgrading from a HDB to an EC – there is also a resale levy applicable.

There is no resale levy applicable if you choose to upgrade from HDB to a private condo.

Of course, having a lower loan liability is always good.

But what if we can do more with our extra funds instead of going into the downpayment?

I think it is better to let some of these monies not to be tied down – than putting them into the house as downpayment right?

#3: 5-Year MOP and 2-Years Building Time

After the EC is launched for sales and we proceed to book – we still need to wait about 2 years to build and another 5 years for the MOP to complete.

If I booked the EC at 40 years old, by the time I am ready to sell – I will be 47 years old.

Assuming I want to sell a small 3-room to upgrade to a bigger and more comfortable unit in future…

I will really feel the stress of only being able to take a loan of up to 65 years old.

I can only take a maximum loan tenure of 18 years!

Other restrictions on buying an EC also includes:
You will have to form a nuclear family, which means both of your names will be tied up in the EC purchase. 

Gone were the days when EC land is cheap and the developer can afford to sell you at cheap prices with big units. It was worth it to buy and wait.

The previous plot of EC land at Anchorvale was sold at only $355 PSF PPR. There was substantial profits if you bought previously then.

But now – it is more risky – with Sumang Walk’s land price of $583 PSF PPR.

You see, not many people actually knows that this Sumang Walk EC is actually not worth it.

But… there are many people who has this belief that buying an EC will “confirm make money”.

For example – Prive, Esparina condo and Austville.

They are all making good profit from the ECs they brought. But please don’t forget – what is the price they bought at?

The previous MND minister – Mr Khaw Boon Wan once said back in 2013:

“But only Singaporeans have this privilege of doing so and they know that, in due course, prices will go up, and to above the level of a Lexus. So, I think it’s a very good scheme and we should ensure its continuity,” he said. – From AsiaOne published on 15 Jan 2013

So what should we do?

Assuming if we can afford to buy the EC?

Don’t Rush In With The Majority Crowd

Instead of rushing with the rest and beg the developer to sell to you – why not look at other developments?

Some developments are not as popular as this upcoming Sumang Walk EC.

Not Willing To Wait for 2-3 Years?

If you belong to the group that wish to avoid the ABSD and you are not willing to wait for the building to be constructed, you can consider the newly-completed private condo developments.

An example is High Park Residences – keys are now ready for collection and the prices are reasonable.

This is just 1 of the examples that are available.

Some of these completed units might be selling at prices cheaper than the projected launch price of the Sumang Walk EC.

They are also quite new – maybe only 1 years old currently.

Larger Loans Is Possible – To Free Up Cash For Other Uses

Did you know that with the same income and age – instead of getting a $600k loan,  you are able to get a $1.2 million loan?

This is because private property loans falls under TDSR rulings.

I am not encouraging you to take more loan. You can still buy $1 million property.

But your downpayment will only be $250K instead of $400K.

The rest of of your available monies can be put inside your CPF OA to still still earn 2.5% interest.

ECs still have it own positive points in the market.

But more importantly, is that we know what we are doing – before we rush in like everyone else.

Don’t just follow blindly.

Yes, with Executive Condos – the idea of buying a Lexus at Toyota prices is attractive.

But it becomes less attractive if the COE prices are also very high. 😉

If you are also one of those people that are waiting patiently for the launch – from what I hear, this Sumang Walk EC – which is called Piermont Grand – will be launched by the end of June 2019.

But before you make any decision, I encourage you to arrange a meet up with me to do a detailed financial assessment to explore what are your other options available.