Competition from smaller homes affect GCB sales

Owners of Good Class Bungalows (GCB) are finding them harder to move in the current market as competition from smaller landed homes in the vicinity has proven to be strong – on the mainland that is. In Sentosa Cove, sales of landed properties have increased from 4 to 7 this year.

BinjaiParkGCB1Across the segment, sales volume has however fallen from 11 to 10 this year according to caveats filed. Under the Urban Redevelopment Authority (URA) zoning districts, 39 are names as “Good Class Bungalow areas”. The most well-known are the Bukit Timah and Tanglin districts though there are some in the Bukit Panjang and Binjai Park areas as well. A GCB is defined as a bungalow with a minimum plot size of 1,400 sq m.

Smaller landed homes, some being bungalows, are gaining buyers’ attention with 20 transactions sealed thus far in the year, totally a sales value of $432.2 million, almost 45 per cent higher than last year’s. Most of the buyers are corporations or high net-worth entrepreneurs, mostly being new citizens from China.

HillviewEstate BungalowMore landed homes are however being sold as buyers pick up deals following a fall in landed home prices and their potential long-term value due to limited supply. A total of 538 land homes were sold and landed residential prices have fallen 0.4% in Q2. Interest in landed homes have been on the rise, though property analysts are modest in their expectations for the GCB market segment, with an estimate of 30 to 35 transactions for the whole of 2017. As there are limited number of GCB in prime locations for sale, the lower numbers could come from a place of circumstance rather than ability.

Good class bungalows apple of high-net-worth buyers’ eyes

Land is rare in Singapore, hence the value of freehold properties. And if you own the land on which the property stands, the value of your asset could be even higher. And the rarities of rarities, sizeable landed properties oftentimes in exclusive enclaves surround by greenery and in prime locations, are the few and far in between Good Class Bungalows (GCBs).

BinjaiParkGCB1These highly sought-after and equally pricey landed properties are often considered long-term investments, especially by high-net-worth individuals or even exclusive funds. In the whole of Singapore, there are only 2,500 of these GCBs which are of at least 1,400 sq m (or the estimated size of a quarter of a football field) and 2-storeys tall. In addition to the size, the liveable “roofed area” can only take up 35 per cent of the entire plot of land, ensuring a majority of open space.

Out of these 2,500 Good Class Bungalows left in Singapore, 65 have been gazetted for conservation. Most of these are situated in areas where Singapore’s first plantations were located, including Bukit Tunggal, Caldecott Hill and Cluny Hill. Prices of GCBs vary from the expensive to the well, very expensive. In less centralised districts such as Caldecott and Binjai Park, these properties tend to be priced slightly lower than those in prime districts such as Nassim Hill and the surrounding Tanglin area such as Bishopsgate and Chatsworth. It is not uncommon to see prices of $20 million and up for these rare cream of the crop properties. And with the property sector feeling more upbeat this year, the second half may see more Good Class Bungalows transactions taking place.

 

 

Success of collective sales continues

2017 continues to be a good year for the collective sales market with Shunfu Ville given the go-ahead from the Court of Appeal last week and the sale of One Tree Hill Gardens site for $65 million this year.

OneTreeHillGardensThe Lum Chang Group has purchased the latter freehold landed residential development site near Orchard Road at $1,644 psf. Its proximity to Orchard Road makes it a prime site that is rare also because of its freehold status. It is of sizeable land ratio and developers have expressed considerable interest. The site was initially put up for sale at $72.8 million. Despite the $7.2 million shortfall, individual owners of the 6 maisonettes and 7 apartments will still receive $4.3 to $9.1 million depending on the size of their units.

Under a 2014 masterplan, the freehold site is zoned for 2-storey semi-detached residential use within a 39,063 sq ft land area. What it could potentially yield are 8 semi-detached houses, 5 bungalows or 10 semi-detached homes and 3 bungalows. With such landed properties near Orchard Road a scarcity, the freehold homes will no doubt receive much interest from investors and high net-worth buyers.

venturaheightsWhile the market is still tender from the previous years of slow growth, developers are beginning to replenish land stock and collective sales may be their means to the ends as the government has recently cut back on the release of land plots. Though price-sensitivity continues to rule developers’ bids, the collective sale market will be active this year especially with more home owners enquiring about en bloc sales and the sale of Eunosville and Rio Casa last month.

Luxury market makes for a suitable investment playground

Recent news of veteran banker and one of Singapore’s richest men, Wee Cho Yaw’s latest property purchase of 45-units at the luxury property, The Nassim for $411.6 million, may have reignited interest from potential buyers of high-end luxury apartment units.

Seascape at Sentosa Cove.

Seascape at Sentosa Cove.

Although property prices have fallen last year, the rate of decline has slowed and the luxury market has fared considerably better than the other property segment. Prices of high-end properties in prime districts, particularly in the Central Business District, Orchard road and Tanglin areas, have fallen 1.2 per cent last year. But the fall is still lesser than the 2.8 and 3.4 per cent in the city fringe and suburbs respectively. This segment also clocked more transactions last year, an increase of 48.7 per cent from 2015. Home sales in the city fringe and suburbs rose by 27.2 and 3.7 per cent.

Meyer Road Bunaglow2Property analysts are confident that the luxury market will find its footing more firmly this year as the supply of high-end properties will increase in the next few years. Though rents have fallen, those who have the holding power will come out tops in the long run, when the property cooling measures are relaxed. Most sellers put a 15 to 20 per cent premium on the value of freehold properties. Property auctions and en bloc sales could be activities to watch this year, especially for those with cash to spare and the financial endurance to last through at least the next few years.

 

Status quo for landed property market this year

Though figures from the last quarter indicated that landed home prices have risen 0.9 per cent, that was following a 2.7 per cent fall in Q3. Property analysts are careful not to yet call it a market rebound as 2017 may pose a difficult year for the economy.

bishopsgateThe landed housing market may continue to feel the pressure this year as cooling measures remain and the economic outlook seems uncertain. In a year-on-year comparison with Q3 of 2013, prices have fallen 14.8 per cent. Overall landed home prices fell 4.4 per cent last year and 4.1 per cent in 2015. The lowered prices could however have been a factor in bringing buyers back. Should sales volume and landed home prices continue to stabilise, the price index may inch up albeit gradually.

There were several considerable transactions in the detached landed house segment and this could have boosted numbers in Q4. One notable sale was for a property in Bishopsgate, at $26.8 million and a couple of others in Holland Park and White House Park at $25.5 million each. Though the Total Debt Servicing Ratio (TDSR) framework implemented in 2013 has limited buyers for private properties across the board, it has more effect on the higher-priced property segments as investors here may have more financial commitments.

whitehouseparkDespite a muted landed housing market last and possibly this year, landed homes remain much sough-after and investors in these segments may be bolder in their attempts to close deals this year.

Foreign investors like Singapore property market for its stability

http://www.thehumanbuilding.comThe recent en bloc sale of Shunfu Ville to Qingjian realty plus a $145-million dollar sale of a Cuscaden road bungalow to a Hong Kong Tycoon may have boosted foreign-investment sentiments, especially in the property market. It shows that many high net-worth individuals and funds are finding long term potential in Singapore’s property market.

AsiaSqaure

Photo credit: http://www.thehumanbuilding.com

They often have the financial holding power and are looking beyond short-term cyclical trends, setting their sights instead on mid- to long-term goals of 5 to 10 years. Asean is just beginning to boom, as many of the nations and economies become interwoven and thus provide more opportunities for growth and a general sense of vibrancy and promise. Aside from residential properties, commercial properties are also faring well, with offers of up to $560 million being made for the Straits Trading Building on Battery Road and $3.5 million for Asia Square Tower 1. Many regional and global companies are setting up headquarters in Singapore and will be looking at picking up office, commercial and retail spaces.

The recent dealings though hardly representative of Singapore’s weakening local market, may be a positive sign that companies, funds and high net-worth individuals are still happy to put their monies in Singapore properties. And though a market turnaround may not be quick, the time will come.

 

Bungalow of Tan Tock Seng’s descendant sold for $145 million

Is paying $145 million for a landed house over the top? Well, there is a first for everything.

The recent sale of a 25,741 sq ft freehold bungalow at 9 Cuscaden road is the first foray into Singapore’s property market for Hong Kong tycoon, Stanley Ho who has made billions through the gambling industry. The bungalow was put up for sale by Tan Tock Seng’s descendants and the site is zoned for hotel redevelopment with a plot ratio of 4.2. The bungalow was originally the family home of Tan Tock Seng’s great-grandson, Tan Hoon Siang and was put up for sale for between $160 to $170 million just last month. Named Villa Marie, it was presumably named after Mr. Tan’s second wife, Marie Windsor.

BungalowsStanley Ho’s Shun Tak Holdings paid $145 million for the prime site, the highest ever paid for a landed property and at $2,145 psf, it is all eyes on what is eventually built. Because of how it was zoned, the transaction was made sans the Additional Buyers’ Stamp Duty (ABSD), which could be a real positive, considering how much the deal cost. Though zoned for hotel redevelopment, there is also the possibility of building residential units up to 20 storeys high. Could Orchard road be seeing a new residential block or hotel in its midst? Will other landed properties possibly be seeing more activity soon?

 

Promising year ahead for landed properties?

At least in the Good Class Bungalow (GCB) segment apparently. Property analysts are predicting a 5 per cent price growth this year following promising response in the first quarter alone.

Despite economic slowdown and stock market volatility earlier in the year, this luxury landed property sector has seen a pick-up in sales volume as Singaporean investors are turning their sights on home ground once more, after a few seasons of investing in overseas propeties. Property agents have reported buyers making serious offers as compared to just a quarter ago in the latter part of 2015.

Leedon Road GCBRecent sales of GCBs included one at Swettenham Close at $1,354 psf. A total of 33 GCBs were sold in 2015, a similar number is expected for this year. Perhaps property owners have lowered their expectations and asking prices, and buyers are also enticed by the rarity and land area these bungalows provide. Many are upgraders or investors while sellers tend to be those whose children have flown the coop and are looking to downsize to more manageable properties. Rental yields for these large-sized properties have been diminishing, and these properties also tend to have higher property taxes and maintenance requirements.

Buyers may be more willing to take the bite this year as prices have already fallen 15 per cent since its peak in 2013, and further price declines will be unlikely. As these landed properties are also far and few in between, they may be quicker to pounce on a deal as it will not be easy finding similar options.