Monday, January 07, 2013

$2mil EC Penthouse: Does MND or HDB exercise oversight over developers?

Dear friends,

My opinion about the recent fiasco about the $2.05mil EC Penthouse is published in the Straits Times Forum today( Click here).

Part of the information in the letter was from this post from TR Emeritus ( click here)

The original letter is as follows:

Dear Editor
The recent sale of a 4349 sq ft Executive condominium (EC) penthouse for $2.05 million has raised many questions that need to be answered.

The Executive Condominium (EC) scheme was introduced in 1997 to cater to “sandwich class” Singaporeans who have exceeded HDB’s income ceiling yet have difficulty affording private housing.

 According to HDB’s website, the eligibility criteria for EC’s include being Singaporean and being part of a family nucleus. More significantly, the average gross monthly household income must not exceed S$12,000.

 The EC in question is CityLife@Tampines, a joint venture by 3 developers, Creative Investments (40%), subsidiary of Amara Holdings Ltd, Singxpress Property Development (30%) and Kay Lim Realty (30%). This JV successfully bid $233.5 million for the land when the tender closed on 10 May 2012.

According to the commonly used Affordability ratio ie price of house ($2.05million) over the annual income ($144000) the Price-to-Income Ratio, ie Affordability Ratio is 14.2. Most property analysts will classify this as not affordable.

The World Bank considers a ratio of 5 or under as affordable for local residents, while the United Nations have set the standard lower, at 3 .

The questions that immediately come to our minds include:

1. Does HDB, MND or any other government agencies (ie regulators) exercise any control over how the developers’ design and build the EC’s? If not, why?

2. Did regulators approve Citylife’s plan for these penthouse units? If so, are EC penthouses justified? If not, did Citylife contravene any rules?

3. Do the regulators feel that Citylife’s developers fulfilled the spirit of the EC scheme? If not, what are the consequences for Citylife?

What irked me even more was when the same developers, when interviewed at the launch of Citylife, claimed that they would continue to build more penthouses for future EC projects! This was surely an act of impunity nearly akin to raising a middle finger to an already incensed public!

Can the relevant authorities please comment?

Dr Huang Shoou Chyuan

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