{"id":7346,"date":"2016-10-07T05:32:02","date_gmt":"2016-10-06T21:32:02","guid":{"rendered":"https:\/\/www.99.co\/blog\/singapore\/?p=7346"},"modified":"2022-07-01T04:04:10","modified_gmt":"2022-06-30T20:04:10","slug":"privatised-ecs-higher-rental-yields","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/privatised-ecs-higher-rental-yields\/","title":{"rendered":"Do privatised ECs offer higher rental yields than private condos?"},"content":{"rendered":"
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\"Completed
Completed in 1999, Simei Green is a privatised condo that still manages to attract high rental yields<\/figcaption><\/figure>\n

It has been widely highlighted that privatised ECs<\/span> do enable owners to achieve high capital appreciation. The profits that such owners made upon a resale can average between 50 to 70 percent, sometimes even as high as 100 percent. Of course, how much return on investment the EC owner gets depends on the holding period, assuming that the property is purchased directly from the developer either in the 1990s or early 2000s. <\/span><\/p>\n

On the other hand, investor owners are also concerned about investment yield. In tandem with the prospect of high capital appreciation, investors pay attention to whether a property can reap good returns if it is rented out. <\/span><\/p>\n

So, do privatised ECs have higher rental yields?<\/b><\/h3>\n

The simple answer is yes. Observations into the pricing and rentals do conclude that generally, privatised ECs do offer higher rental yields compared to private homes in the vicinity. However, this does not happen across the board for ALL privatised ECs; there are cases where an EC may offer rental yields which are similar to the private residential condos in the area. It is worth noting that the gross yield for private condos usually do not exceed 3.6 percent: It usually hovers around 3.1 percent.<\/span><\/p>\n

Estimated gross rental yields of privatised ECs<\/strong><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Project name<\/b><\/td>\n\n

Gross rental yield as at H1 2016** <\/b>(%)<\/span><\/p>\n<\/td>\n<\/tr>\n

<\/td>\n<\/td>\n<\/tr>\n
\n

Chestervale<\/span><\/p>\n<\/td>\n

\n

3.40<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Eastvale<\/span><\/p>\n<\/td>\n

3.40<\/span><\/td>\n<\/tr>\n
La Casa<\/span><\/td>\n\n

3.80<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Lilydale<\/span><\/p>\n<\/td>\n

3.70<\/span><\/td>\n<\/tr>\n
\n

Northoaks<\/span><\/p>\n<\/td>\n

3.70<\/span><\/td>\n<\/tr>\n
\n

Nuovo<\/span><\/p>\n<\/td>\n

3.40<\/span><\/td>\n<\/tr>\n
\n

Park Green<\/span><\/p>\n<\/td>\n

\n

3.70<\/span><\/p>\n<\/td>\n<\/tr>\n

Pinevale<\/span><\/td>\n\n

3.70<\/span><\/p>\n<\/td>\n<\/tr>\n

Simei Green Condominium<\/span><\/td>\n3.90<\/td>\n<\/tr>\n
\n

Summerdale<\/span><\/p>\n<\/td>\n

3.60<\/span><\/td>\n<\/tr>\n
\n

The Dew<\/span><\/p>\n<\/td>\n

3.50<\/span><\/td>\n<\/tr>\n
\n

The Eden at Tampines<\/span><\/p>\n<\/td>\n

\n

3.80<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

The Esparis<\/span><\/p>\n<\/td>\n

\n

3.80<\/span><\/p>\n<\/td>\n<\/tr>\n

The Floravale<\/span><\/td>\n\n

3.90<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

The Florida<\/span><\/p>\n<\/td>\n

3.90<\/span><\/td>\n<\/tr>\n
\n

The Quintet<\/span><\/p>\n<\/td>\n

\n

3.50<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

The Rivervale<\/span><\/p>\n<\/td>\n

3.70<\/span><\/td>\n<\/tr>\n
Westmere<\/span><\/td>\n\n

3.50<\/span><\/p>\n<\/td>\n<\/tr>\n

Whitewater<\/span><\/td>\n\n

3.60<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Windermere<\/span><\/p>\n<\/td>\n

3.60<\/span><\/td>\n<\/tr>\n
\n

Woodsvale<\/span><\/p>\n<\/td>\n

\n

3.80<\/span><\/p>\n<\/td>\n<\/tr>\n

Yew Mei Green<\/span><\/td>\n\n

3.80<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Bishan loft<\/p>\n<\/td>\n

\n

3.20<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Source: URA Realis, <\/em><\/span>URA\u2019s compilation of lease commencements<\/span> and R\u2019ST Research estimates<\/span><\/em><\/p>\n

As can be seen in the table above, Bishan Loft<\/a>, Chestervale<\/a> and Nuovo <\/a>have the lowest yields among all privatised EC developments. Conversely, Simei Green Condominium<\/a>, The Floravale<\/a> and The Florida<\/a> have the highest. It would seem that privatised ECs which have the lowest rental yields, such as Bishan Loft<\/a>, are on par with the standard yields of private residential properties in that area. in addition, Bishan Loft<\/a> has low yield due to its high resale price. While the leasing demand and rents of this development are considered high enough for the investors\/owners, the high resale price itself lowers the overall yield. Interestingly, the high prices for Bishan Loft<\/a> still encourage buyers to purchase units there due to its central location.<\/span><\/p>\n

The same can\u2019t be said for Chestervale<\/a>. Located in Bukit Panjang, accessibility only recently improved when the \u00a0Downtown Line was completed in Dec 2015. Neither is are industrial parks, major factories or business parks in the locality to drive demand, hence the rents of Chestervale<\/a> are very low.<\/span><\/p>\n

Simei Green<\/a> manages to garner a high rental yield due to its entrenched position in the eastern part of Singapore. Privatised ECs in the east are seen as a good place to rent by tenants because they are relatively more affordable and offers quick accessibility to the airport and Changi Business Park. In a similar story, The Floravale<\/a> also enjoys high yields due to its location. Situated in Jurong West, it manages to appeal to tenants as a result of the redevelopment of Jurong in recent years. The same can be said for Westmere<\/a> in Jurong East which performed quite well in terms of rental yield. <\/span>
\n<\/b><\/p>\n

Why do privatised ECs perform better than regular condos?<\/b><\/h3>\n

There are various reasons why privatised ECs have higher rental yields:<\/span><\/p>\n