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Larger and relatively more affordable than private condos, HUDC apartments offer HDB upgraders a viable alternative to executive condos and private property. But are HUDC flats good investments? Here are some facts about them.
Content
- HUDC Flat Meaning
- Where are HUDC flats in Singapore?
- What are privatised HDBs?
- HUDC Flats: Competitively priced?
- HUDC Flats often in popular locations
- HUDC Flats: No 5-year MOP
- HUDC Flats: High rental & sale yield
HUDC Flat Meaning
What are HUDC flats in Singapore?
HUDC stands for Housing and Urban Development Company. HUDC flats are, in layman terms, the predecessors of Executive Condominiums (EC).
The HUDC scheme was first introduced in 1974. Subsequently, HUDC flats were first built in the 1970s and 1980s by the Housing Development Board (HDB) to give middle-income home buyers an option between HDB flats and private properties.
Back then, better paid middle-income families were not eligible to apply for HDB flats - the income ceiling was $1,500. HUDC flats were designed for these families with total household income ranging from $1,500 to $4,000.
These HUDC flats were "mostly high-rise and were larger than HDB units. They were usually in good or exclusive locations similar to private condominiums," states Singapore Infopedia.
However, HUDC flats were phased out in 1987 when demand dipped.
Where are HUDC flats in Singapore?
There's reportedly over 18 HUDC estates in Singapore.
Braddell View was the last to have been legally privatised in 2017. 12 of these HUDCs, obtained at least 75 per cent support from residents and are in the process of privatisation, or have announced their privatisation plans.
Privatisation comes with its own unique challenges. Take the last, Braddell View, for example.
Perched on a scenic hill, Braddell View was built in two phases and on different state leases. This means the expiration dates of the leases (and thus the value of the units) also differ. To move ahead with privatisation requires the older lease on the first land parcel to be topped up.
However, it was difficult to agree on a fair figure concerning how much each owner should shell out. Until the residents can agree on how to move on, privatisation – and potentially lucrative en bloc plans – has to be put on hold.
Singapore's HUDC flats include:
- Lakeview Estate (privatised in 2003)
- Lagoon View
- Farrer Court (now D'Leedon)
- Laguna Park (privatised in 2007)
- Pine Grove (upcoming Pine Grove Condo, BUC)
- Chancery Court (privatised in 2014)
- Eunosville (now Parc Esta)
- Braddell View (privatised in 2017)
- Anthony Garden (now Orchard Scotts)
- Amber Ville (now Silversea)
- Neptune Court (privatised in 1995)
- Gillman Heights (now The Interlace)
- Ivory Heights (privatised in 1998)
- Minton Rise (now The Minton)
- Waterfront View (privatised in 2002, demolished)
- Normanton Park (privatised in 2012)
- Raintree Gardens (now The Tre Ver)
- Shunfu Ville (now JadeScape)
- Florence Regency (now The Florence)
- Hougang Ave 7 (now Riverfront Residences)
- Serangoon North Ave 1 (now Affinity at Serangoon)
- Tampines Court (now Treasure at Tampines)
- Pasir Ris Landed Houses
- Pearl Bank (now One Pearl Bank)
Read Also: House Tour - East Coast HUDC Flat in Marine Vista
HUDC: What are privatised HDBs in Singapore?
In 1995, the government announced a privatisation programme to allow HUDC estates to be “upgraded” to private property status.
When HUDC estates were privatised, residents pay up a lump sum (capped at $30,000 each and payable with CPF funds) which covers the cost of common property transferred to the owners, the legal costs, surveying, and other processing fees. Owners thus get full say on how to manage the estate, a la private condos.
Read More: House Tour - Serangoon HUDC with Semi-Industrial Design
HUDC Flats Are Competitively Priced
Sherry Tang, a senior sales director at DTZ Property Network, noted that most buyers are HDB upgraders who like the spaciousness of HUDC flats.
“Of my clients, half are buying it as a home, although they’re also attracted by the investment value. The others are investors,” notes Sherry, who brokered the record-breaking $1.28m HUDC flat at Shunfu Ville in July 2012.
Buyers include elderly couples, yuppie couples, young families and even singles. “I recently sold one to an investor, a single who intends to rent it out; it can fetch up to $3,500 per month,” she said in 2013.
HUDC Estates Often In Popular Locations
The former Shunfu Ville, for example, was within walking distance of Marymount MRT station, minutes away from town, and surrounded by good eateries. HUDC units, which tend to be larger than the new condos, are also more competitively priced.
At Hougang Ave 2's HUDC estate that was privatised in 2014, executive maisonettes were priced lower than some of the smaller $1m HDB flats around. Similarly, a roomy executive apartment in Serangoon North Ave 1 that was privatised in 2014 was going for $1.35m in 2013, or just $804psf.
Often, once privatisation was complete, values were expected to rise.
A three-bedroom in the privatised Normanton Park was going at $1.25m in 2013. In comparison, a similar unit at the nearby Interlace condominium was going for $2.2m. This made privatised HUDC flats a good choice for those who need more living space but can’t afford sky-high private condo prices.
HUDC Flats Didn't Have Minimum Occupation Periods (MOP)
It is relatively easy for anyone to buy a resale HUDC flat as there isn’t any income restriction on buyers, unlike with new HDB flats.
Buyers weren’t eligible for subsidised financing from HDB, and must apply for a bank loan to finance the flat. HUDC owners can also buy and sell anytime they want – subject to the usual Seller’s Stamp duties.
They could also rent out the whole unit right from day one. They did not have to observe HDB’s Minimum Occupation Period (MOP) rule of five years.
HUDC owners did not need to seek HDB’s permission to rent out their house, too. Some HUDC estates already offered condo facilities such as a swimming pool and barbecue pit; others added these after privatisation.
.Since tenants were generally unconcerned about the categorisation of the property as an executive condo, privatised HUDC flat or a “proper” private condo, it makes sense for investors to buy the cheapest property possible to gain the maximum rental yield.
HUDC Flats Offered High Rental & Sale Yield
In the past decades, some HUDC estates – Amberville, Farrer Court, Gillman Heights, Minton Rise and Waterfront View Estate –undergone en bloc sales, earning residents a pretty penny.
In 2006, Amberville made history as the first former HUDC estate to be sold collectively. It fetched $183m and netted each homeowner about $1.089m (said to be at least 85 per cent above the market rate at the time).
Capitaland then acquired Gillman Heights in 2007 for $548 million. Based on a $363 per square foot per plot ratio, residents were compensated between $880,000 to $950,000 per unit. It is now the site of the Interlace condominium.
In the same year, Farrer Court was sold for $1.34 billion to Capitaland, which turned it into d’Leedon, a condo project due for completion in 2014. Farrer Court owners received a whopping $2.15m each.
Judging from these jaw-dropping prices, HUDC flats do seem to offer good bang for your buck and great potential for capital yield.
However, the sellers were all too aware of it, too – at Normanton Park, some homeowners were asking for $1.65m for their 1,270sqf unit. Even Braddell View, despite its tricky position, residents called for $1.42m for a 1,615sqf unit – on a par with or even higher than prices at the legally privatised Shunfu Ville.
If you are thinking of buying, do remember that these estates are at least 25 years old so expect the usual wear and tear.
Weigh the pros and cons before you jump on the HUDC bandwagon; after all, buying a property, no matter how much of a bargain it seems, is an expensive deal in Singapore.
As more HUDC estates are privatised and “public” common spaces become gated areas, HUDC owners may have to face more of such neighbourly squabbles in future.