Are Condo-Like HDB Flats Good Value?

Source : The Sunday Times, Jan 06, 2008

They might come with fancy trappings but can't be bought and sold freely like private condos

THE high-end HDB flats launched yesterday at Boon Keng are the talk of the town.

Styled to look like private condominiums, the flats in City View @ Boon Keng will boast timber flooring and large bay windows, as well as built-in wardrobes and kitchen cabinets.

PUBLIC HOUSING WILL ALSO OFFER LUXURY LIVING when City View @ Boon Keng is completed in 2011 by private developer Hoi Hup Sunway. Some units will even have wall-to-wall balconies and master bedrooms with a river view. BH FILE PHOTO

These more luxurious HDB flats, built under the Design, Build and Sell Scheme, are being snapped up by homebuyers. Even before the project's launch, more than 1,000 inquiries had been made. But these trappings come at a price: The 714 flats in the project will be offered for an average price of $520 per sq ft (psf).

While this makes them significantly cheaper than actual condos in the area, the prices are a cut above those for regular HDB flats. City View's three-room flats will go for between $349,000 and $394,000 - about double what similar flats in the vicinity cost.

THE FIRST PROJECT under the Design, Build and Sell Scheme, The Premiere @ Tampines, drew huge crowds at its 2006 launch. PHOTO: SIM LIAN LAND

The five-room flats will range from $536,000 to $727,000, which also makes them far pricier than nearby flats. The average price of a five-room flat in Boon Keng is about $450,000, said Mr Nicholas Mak, the director of research and consultancy at Knight Frank.

As a result, even as would-be buyers form long queues for City View, property experts are divided as to whether the project is really worth its heftier price tag.

The main point of contention is what City View, and projects like it, should be compared to as a baseline: HDB flats, executive condos or private condos.

City View is only the second public housing project to be built by a private developer - in this case, Hoi Hup Sunway. The first, The Premiere @ Tampines, is being built by Sim Lian Land.

Property agents believe City View should be compared to condos. They highlight the premium finishings and central location, and the fact that the flats are much cheaper than condos in the area. 'The furnishings, design and layout are comparable to those of private properties,' said Mr Mohamed Ismail, the chief executive of property agency PropNex.

'I think the price is worth it, especially if you're talking about a three- or four-room flat for $300,000-plus in such a location.'

He noted that a three-room flat in the Rochor area that is over 30 years old can command $80,000 to $100,000 over valuation.

He added: 'In eight years, City View will still be half the cost of private property and I'm very sure it will be able to find buyers. It will be a golden investment then.'

HSR Property Group, which is marketing City View, pointed to the strong demand for the project even before its launch.

'The resale value will be there because consumers will pay for the convenience and rarity,' said Ms Kellie Liew, a project director at HSR. 'When you look at private condos, you can't get this price.'

In contrast, property consultants said City View flats were more readily comparable to other types of HDB flats than to condos. They lack the security and amenities provided in condos and cannot be resold to foreigners, said Mr Ku Swee Yong, the director of marketing and business development at Savills Singapore.

'The project is more expensive than HDB, but you still have HDB rules and HDB guidelines for ownership,' said one consultant who asked not to be named. 'The better location doesn't justify the higher price tag - it's supposed to be public housing!' City View flats are sold under the same rules that apply to new HDB flats. Buyers qualify only if they fall under an approved family nucleus scheme, among other things.

Mr Mak noted that the flats cannot be resold for the first five years. 'This sort of thing tends to be a consumer item - you buy, you use, and if you make money from it, you're lucky,' he said.

'If you buy direct from HDB at a subsidised rate, it's a better investment as there's more room for capital appreciation. But if you buy the flat at a high price to begin with, the upside is limited.'

Even owners of executive condos - which have condo facilities and can be resold to foreigners after 10 years - are finding it difficult to make a profit on their homes, added Mr Mak.