Should I Sell My Executive Condo (EC) After MOP?
Updated: Mar 15
Executive Condominiums (ECs) were first launched by the HDB in 1997 and first built in 1999. They were developed as the next step up for HDB flat owners. During that time, most buyers were planning to sell their ECs only after the 10th year, when the condominiums were fully privatized. After 10 years, the ECs can be sold or rented out to foreigners. The belief was that this was the best way to earn profits. Like all HDB properties, an EC can only be sold in the open market after the 5 years Minimum Occupation Period (MOP). Under government regulations, 5 to 10 years old ECs are often called “partly privatized”, and can only be sold to Singaporeans or PRs.
If you are an owner of an EC, when is the best time you should sell your property?
We will discuss this in detail in this article.
What Is Your Goal In Selling Your EC Now?
In my years of working with property owners, I saw more people selling their ECs soon after MOP. They do so to unlock equities so as to reinvest in other properties. When owners contact me to explore if they should sell their ECs, one of the first questions I always ask is: Why do you want to sell the property?
Owners of EC usually cash out immediately after the MOP for three reasons: First, they want to upgrade to a larger (or better) unit. Some move to a private condo or a larger apartment. Others move to places closer to their parents, workplaces, or amenities (MRT stations, transportation hubs, shopping malls, schools). Second, they might want to downgrade to an HDB unit and put the extra money in the bank. Many of these sellers are retirees or retirees-to-be. Third, they want to use unlock the cash to invest in other assets. Bonds, equity, mutual funds, ETFs or to own multiple properties.
We should be clear about the goals in selling the property and not just blindly follow the crowd without doing a detailed assessment. Once we have ascertained the goals, I will then assess the following factors.
Factors To Consider Before Deciding If You Should Sell Your EC Now
(1) Number of units selling in your EC
Most of the ECs are a fairly huge development with a few hundred units.
Before putting up the unit for sale, we have to consider if there are many units selling. If there is a lot of competition, it might force the sale price to be lower.
For example, Citylife @ Tampines achieved MOP in February this year. A check on PropertyGuru shows that there are 46 listings for sale.
Sea Horizon (located in Pasir Ris) will be reaching MOP in Oct this year. There are 38 listings for sale in PropertyGuru at this point in time.
While some of the units are duplicate listings, the amount of competition is definitely there if you put your unit on sale right after MOP.
Therefore you might want to consider waiting until there is less competition. When the supply is lower, you can then put the unit up for sale. This could take up to 6 months or a year, but it may be worth waiting.
(2) Supply of resale condominiums in your neighborhood
Are there many newly-TOP condominiums for sale in your area?
For buyers looking to purchase a condominium unit in your area, they will also be looking at their options in the different developments.
Besides units for sale in your EC, units for sale in other similar developments are also a competition to your unit.
Moreover, these units are not EC and they do not require a 5 years MOP to sell. Therefore they might be newer than your unit. Simply put, when there are many units for sale, buyers will have many choices and this might pull down your sales price.
The best scenario is if your EC is surrounded by BTO flats or older residential developments.
New BTO flat owners often cash out like yourself after the MOP period, and then move to buy an EC unit in the neighborhood. Similarly, if there is a glut of old residential properties around your neighborhood, some owners there may be looking to upgrade to a newer development like your EC.
You should always study the URA Master Plan before you sell or make purchases, as it shows the projected statutory land use over the next 10 to 15 years, as planned by the Singapore government.
(3) Growth Plan In Your Neighborhood
What residential or commercial plans are being developed in your neighborhood?
Is HDB or any other real estate developers planning to develop new residential developments?
In terms of transport and amenities, are there any new MRT stations, schools, hospitals, shopping malls etc being planned in your area?
Again, you should consult the URA Master Plan. It is always prudent to study the government’s plan for that neighborhood before you sell or make purchases. Of course, you should invest in areas planned for high growth and development. How long will the development plans take? Should you wait till then to cash out?
All these are important factors to consider before making a decision whether to sell your EC now.
(4) Returns For The Next Investment You Are Going Into
What do you plan to do with the money after you cash out on your EC? How sure are you to make more money? People often think they can invest in better properties or instruments after cashing out. But it may not be the case. You may end up choosing an investment instrument that does not make better returns than your EC.
Always make a plan and weigh the risks. How sure are you to make a profit when the money is reinvested? Also, what options are available to you? For example, if you intend to do multiple property purchases after cashing out, how should you structure the investment so as to save costs like Additional Buyer Stamp Duty (ABSD).
Only when you have all your bases covered should you make the prudent decision to sell, especially if you are planning to reinvest the cash.
(5) Existing Economic Situation
It is generally not advisable to sell when the economy is in a downturn. You will sell at a lower price or even end up selling at a loss. During such periods, there are fewer buyers. Many who urgently need money may sell at a much lower price, resulting in better bargains for the cash-rich investors. Also, sometimes the market may experience a knee-jerk response towards certain situations. One such period is immediately after the cooling measures are introduced by the government. Sellers should therefore avoid such a period when planning to sell your property. As property markets are cyclical, those who adopt a patient, “wait and see” attitude will often be the ones who reap the best rewards. Most economic downturns are after all temporary.
Many people are now selling EC units right after the MOP, thinking that they will surely reap a handsome profit. That they can then reinvest and make even more. This is the most optimistic scenario, which may not arise. Housing agents will often persuade you to sell. But the final decision must be made by yourself. You should consider many factors, not just the MOP. The current housing market, the potential of the area, and how the economy is doing may be the most important. Also, what are your goals and priorities? Will you be satisfied with a better house
or property, even if you sell your EC at a little loss? Do you plan to downgrade and put the cash-out into your retirement fund? Have you enough for your rainy days? Are you a risk-taker? These are questions you should ask yourself. Don’t let other sellers influence you into making a hasty decision. Make yours based on research, needs, and priorities. This is the best way not to end up regretting it!
If you would like to have a non-obligated discussion on if you should sell your property, make an appointment with me.
See you soon!
About The Author
Vivian is an experienced real estate agent who has been in the industry since 2002.
Over the years, she has transacted numerous property deals including HDB and private properties. She is well-versed in policies and regulations involving the sale and purchase of residential properties. She has also handled many transactions involving complicated situations like contra, divorce, administration/probate cases, and decoupling / part-share purchases.
Vivian is also a mother to 2 boys. Being a real estate mom allows her to spend more time with her children as they were growing up. Both boys are avid footballers representing their schools and clubs. She loves watching their games and hardly misses a game whenever they play.
Vivian is an active real estate salesperson and team leader. Call her at 98577714 for your real estate matters, or if you are looking to join the real estate industry.