Buying Resale EC – can you make money ?

Buying resale ec

Table of Contents

Introduction

You probably landed on this article because you are planning to purchase a resale EC.

The new facade and good condition of units within ECs that have just achieved its minimum occupancy period could be enticing, especially if you are upgrading from a HDB or BTO to your first private property.

Emotions aside, have you wondered if purchasing an EC immediately after its MOP is a profitable investment ? Have you wondered if purchasing an EC after its MOP can be a better investment than purchasing a resale private condo ?

Before you start jumping into property portals to look at listings, let’s find out if you can make the next 300k profit for your next move.

Focus of this article

This article focuses on finding out if it is profitable to buy into a resale EC that has just MOP. We will compare the price appreciation of 7 different resale EC projects against their resale counterparts.

At the end of this article, you should walk away knowing if you are making a wise move by purchasing a resale EC.

A little bit about ourselves

We started as property owners like yourself, white collar corporate employees bent on finding ways to make money in real estate. The experience of flipping ECs and building a duo property portfolio have been enlightening.

We now specialise in helping property owners find the best ways to purchase investment properties without ABSD. Aside from helping clients decouple property, a large part of our work revolves around helping our clients derive the best ways to make money from real estate.

The common overarching strategy of making money in real estate

If you have put in your fair share of time researching real estate investing, you would realise that generally people make money from flipping real estate via two methods.

  • Buying a new launch project and flipping it at an opportune time after it TOP or
  • Buying a EC directly from developer and flipping it after it MOP

Both of which entail some form of first mover advantage, but have you wondered if there is a “second mover advantage” in purchasing a resale EC immediately after its MOPs ?

Consider the investment case of enjoying a second wave of price increase for resale EC

The idea is that the first owners of ECs purchasing the unit at a subsidised price directly from the developer would be sitting on a healthy profit even if they were to sell their unit at a lower psf then surrounding comparable private condos.

This provides potential opportunity for you as a buyer of a resale EC to purchase the unit at a lower psf entry price then comparable private condos in the area.

To a certain degree the initial discount that the initial buyer enjoys could be passed on to you, on the condition that you are able to negotiate for an advantageous entry price.

The profit making opportunity comes as time passes, future buyers do not care or differentiate between the resale EC and the private property in the area. Hence the prices of the EC tends to appreciate and converge towards the pricing of the private property.

Validating the investment case for buying resale EC

Having established the hypothesis of how buying a resale EC can prove to be a profitable venture, let’s validate that with transactional data from 7 EC development that has recently achieved its MOP status.

Research method

To objectively evaluate the hypothesis, we selected 7 developments from our latest complete list of EC with MOP dates.

We specifically highlight the average entry price for buyers purchasing EC units immediately after its MOP. We then map these entry prices to the transacted prices for similar unit types over a 3 to 4 year holding period.

The goal is to derive the unrealised “paper” gain that these MOP resale EC buyers are sitting on.

Resale ECLocationMOP Date
RiverParc ResidencePunggol Drive19 June 2019
Heron BayUpper Serangoon View7 October 2020
The Tampines TrilliantTampines Central 76 February 2020
PrivéPunggol Field17 July 2018
The CanopyYishun Avenue 1114 January 2019
1 CanberraCanberra Drive19 September 2020
WaterColoursPasir Ris Link31 December 2019

Potential profit for resale MOP EC buyers

Riverparc Residences

Riverparc residences is an EC that fulfilled its 5 year MOP status on 19 June 2019. In the study below the resale EC buyers that purchased a unit in the year of its MOP made at profits between $411k to $681k, assuming they were to hold it for a 4 year holding period.

Holding period – 4 yearsHolding period – 4 years
BedroomsArea(sqft)Unrealised PSF Gain – for Buyer purchasing EC 1st year after MOPUnrealised Capital Gain – for Buyer purchasing EC 1st year after MOP
2829514425,968
3990416411,895
1,076397427,633
1,227405496,935
1,981313620,053
41,238352436,012
1,346458616,917
1,485459681,615

Heron Bay

Heron Bay is an EC located between the intersection of Sengkang and Hougang. It achieved its MOP status in October 2020. Similarly resale EC buyers that purchased a unit the year it MOP, is seating on unrealised profit of between $290k to $421k.

Holding period – 4 yearsHolding period – 4 years
BedroomsArea(sqft)Unrealised PSF Gain – for Buyer purchasing EC 1st year after MOPUnrealised Capital Gain – for Buyer purchasing EC 1st year after MOP
31,023284290,021
1,033349360,901
1,227291357,057
41,281276354,132
1,389304421,562
2,271286649,506
51,496250374,000

The Tampines Trilliant

The Tampines Trilliant is a 607 units mid sized EC development based in Tampines. It is located at close proximity to two private condo developments, Citylife@Tampines and Pinevale. Resale EC buyers purchasing a unit the year it MOP in february 2020 is seating on a unrealised profit of between $286k and $440k.

Holding period – 4 yearsHolding period – 4 years
BedroomsArea(sqft)Unrealised PSF Gain – for Buyer purchasing EC 1st year after MOPUnrealised Capital Gain – for Buyer purchasing EC 1st year after MOP
3872329286,621
1,001364364,091
1,012390394,680
1,130386436,165
1,238356440,728
41,302294383,341

Prive

Prive is a resale EC that MOP in 2018. It is located in the Punggol area. Despite the huge supply of ECs in the Punggol area, buyers that purchased a unit immediately after it achieves it TOP status are sitting on a unrealised profit of between $196k to $401k.

The lower profit range of $196k to $242k is due to the sub-optimal performance of smaller 2 bedder units in the development. If you solely account for larger 3 and 4 bedroom unit, you will be looking at a profit range of $324k to $403k.

We touch on the influencing factor of unit sizes in later sections.

Holding period – 4 yearsHolding period – 4 years
BedroomsArea(sqft)Unrealised PSF Gain – for Buyer purchasing EC 1st year after MOPUnrealised Capital Gain – for Buyer purchasing EC 1st year after MOP
2775285221,069
818240196,320
829293242,897
883289254,746
1,055342360,546
31,001324324,324
1,087363394,270
1,098310340,576
1,130289326,947
1,227251307,977
41,442280403,760

Not all resale EC development performed as well

While all resale ECs buyers who bought into a EC during its MOP are profitable, not all resale EC development brought about outstanding profits like those listed above.

Fundamental attributes that define a good investment condo such as URA development plans, proximity to reputable schools like Rosyth primary and Nan Chiau primary, demand from surrounding HDB upgraders and unit layout is still at play.

Below are some resale EC developments that are profitable but may not have yielded outstanding profits like those listed above.

The Canopy

A EC development situated in Yishun, it achieved its MOP status in 2019. Resale EC buyers that purchase during its MOP years are looking at an unrealised profit between the range of $196k to $236k.

A quick review of the 3 bedroom layout, you would quickly realise that it does not feature the most efficient layout. It comprises two balconies, with a long corridor walkway leading to some inefficiency in usage of space.

Holding period – 4 yearsHolding period – 4 years
BedroomsArea(sqft)Unrealised PSF Gain – for Buyer purchasing EC 1st year after MOPUnrealised Capital Gain – for Buyer purchasing EC 1st year after MOP
2872225196,536
883304268,726
1,033135139,868
1,055196206,780
31,184241285,344
1,195198236,311

Watercolours

A EC development that achieve its MOP status in 2019, resale EC buyers see profits ranging between $271k to $342k

Holding period – 3 yearsHolding period – 3 years
BedroomsArea(sqft)Unrealised PSF Gain – for Buyer purchasing EC 1st year after MOPUnrealised Capital Gain – for Buyer purchasing EC 1st year after MOP
2743192142,285
786276216,779
3915345315,950
936290271,440
958312298,630
1,098343376,065
1,141300342,490
41,238267330,546

Profitability of MOP resale EC vs resale condo

In the sections above, we established that buyers of resale EC, making their purchase within the first year of its MOP, are indeed enjoying some healthy psf price appreciation and are sitting on significant profit.

The next question to ask is how did these resale EC’s price appreciation fared against comparable resale private condo development within the same location.

In the section that follows, we will be charting the price appreciation of the resale EC development that we have featured above with its comparable private condo counterpart.

RiverParc Residence (resale ec) vs Flo Residence (resale private condo)

Referring to the price chart above, you can see that there is a convergence in psf pricing for RiverParc Residence vs Flo Residence.

At MOP, the average psf of RiverParc Residences at $890 psf is lower than Flo Residences at $950 psf, in 2019. It is noted that Flo Residence is 2 year younger in terms of lease life compared to Riverparc.

But as the years progresses, you can see that the psf pricing of RiverParc residences close in on Flo Residences. In fact in 2024, Riverparc Residences average psf supersedes that of flor residences.

A resale EC buyer for a unit in RiverParc Residences that purchased during MOP in 2019 would have enjoyed a psf price growth of 56%, compared to a resale condo buyer, purchasing a unit in Flo Residence, would have only enjoyed a price growth of 36%.

Prive (resale ec) vs Parc Centro (resale private condo)

Comparing Prive against comparable private condo Parc Centro that is located 300m away. The same trend is observed, with Prive resale EC owners enjoying a healthier price appreciation of 40% vs 30% for owners that bought into Parc Centro.

Tampines Trilliant (resale ec) vs CityLife Tampines (resale private condo)

Similarly when comparing Tampines Trilliant to its comparable Citylife Tampines private condo, the buyers of resale EC Tampines Trilliant enjoyed a healthier price growth of 41% vs 30% , if they were to made their purchase within the first year of the EC’s MOP and held it till date.

Summarising observation

To summarise our observation of the price growth comparison between resale EC and resale private condo.

One key commonality would be, initially the entry price for the resale EC during its MOP tends to be lower that a comparable private condo.

But as time passes, future buyers do not differentiate between a resale private condo or a resale EC and they are willing to pay the same, if not more for it.

Is it wise to buy a resale EC ?

So back to our big question, is it a wise investment to buy into a resale EC after it MOP ?

The short answer is yes, if the following criterias are fulfilled

  • You can get a entry price that is reasonably lower than surrounding private condo
  • The EC development possesses good fundamentals – i.e proximity to good school, healthy hdb upgrader demand etc.
  • The layout is efficient

Eligibility to buy resale EC

Now that we clear the investment consideration for purchasing a resale EC, let’s consider whether you are eligible to purchase it.

Citizenship

  • For resale EC between 5 to 10 years old – Singaporean citizen and PR are eligible to purchase
  • For resale EC from the 11th years onwards – Foreigner, corporate entity, Singaporean citizen and PR are eligible to purchase

Family Nucleus

Age

  • You must be at least 21 years old to purchase a resale EC

Monthly household income

  • No income ceiling to adhere to for resale EC

Private properties

  • You can still purchase a resale EC, even though you currently owned a private property
  • Note ABSD is applicable – refer to following article on how to avoid ABSD

HDB, DBSS owners

HDB Grants

More reads, more gains ?

Kudos on making it this far. The fact that you have invested the last 5 mins reading this article. We believe you are a like minded real estate investor looking to beat the rat race by getting more out of your real estate investment.

If so, do check out the following articles.

Author

  • Jue Wen

    Jue Wen is the content marketing lead. This means he spend his waking hours researching and writing all things real estate. He believes life is a hustle and there is no joy in grinding away daily in our little rat races. He believes making wise moves in real estate investment can be a game changer. Aside from writing all things real estate, you can find him in your nearest bouldering gym.

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Jue Wen

Author

Jue Wen is the property analyst and content marketing lead at decoupling expertise.
He specialises in helping clients overcome the complexities involved in owning their second private property in Singapore.
He had over 10 years of experience in real estate investing and have written over 40 detail guides on decoupling and minimising ABSD. He is a licensed real estate consultant and holds a Bachelor degree in Business Management from the Nanyang Technological University.

Kenji

Co-Author

Kenji is the Group Division Director of ERA Realty Network.
He have got over 20 years of experience in real estate and have successfully helped over 50 couples purchased their second property. He specialises in helping client achieve the best approach towards acquiring their ideal investment properties while minimising ABSD.