Q1 deals may signal market for Good Class Bungalows looking up

THE Good Class Bungalow (GCB) market may be headed for a pick-up in transaction volumes this year, if the results for the first quarter are anything to go by.

A mix of lower price expectations by owners and pent-up demand for the limited-supply, prestigious landed housing form has helped to narrow the price gap.

The result is that more deals were sealed in Q1 than in the previous quarter and in the year-ago quarter - notwithstanding the current weak economy and the stockmarket volatility at the start of the year, noted agents.

Realstar Premier Group managing director William Wong said: "With the economic slowdown, GCB sellers have been more realistic in pricing their properties, enticing buyers."

CBRE's analysis shows that nine properties GCB Areas were transacted for a total S$209 million in Q1. In the fourth quarter of last year, there were also nine deals, but they were worth only S$161 million; in Q1 last year, there were just four transactions that added up to S$95 million.

Douglas Wong, head of luxury homes at CBRE Realty Associates, commented: "Owners who bought GCBs several years ago have found it profitable to sell at today's prices rather than later, in view of the uncertainties in the economic outlook."

Good Class Bungalow deals in 2016

  • A charming single-storey bungalow on a sprawling site in Queen Astrid Park has changed hands for S$44.5 million. The buyer is understood to be a family member of Goh Hup Jin, son of billionaire paint tycoon Goh Cheng Liang.
  • A house along Kingsmead Road where the late Raffles Institution principal Philip Liau used to reside is being sold for S$29 million.
  • The price works out to S$1,065 per square foot based on the freehold land area of 27,228 sq ft.
  • The buyer is understood to be Darwin Indigo, a nephew of Wilmar executive deputy chairman Martua Sitorus. Mr Indigo, who is in his mid-30s, is deputy country head (Indonesia) at Wilmar International.
  • The S$29 million transaction is the biggest deal in a GCB Area since a S$32 million sale along Queen Astrid Park in July last year.
  • Ezra Holdings' Lee family has put their waterway-fronting Sentosa Cove bungalow on the block. The exclusive 2-storey 5-bedroom property comes with a price tag of S$26 million, or S$2,258 per square foot on land area.
  • The property is held by Lee Kian Soo, Ezra's founder and chairman and father of Lionel Lee, the offshore marine firm's chief executive and managing director.
  • In October last year, Mr Lionel Lee and his mother sold their GCB along Windsor Park Road for $21.8 million.
  • The freehold property at 122 Windsor Park Road, off Upper Thomson Road, has a land size of 20,383 sq ft, which works out to a price of about $1,070 per sq ft (psf).
  • In Jan 2016, a GCB along King Albert Park, which comes with a swimming pool, was sold by upmarket developer Simon Cheong.
  • The property fetched S$25 million, which translates to S$1,493 per square foot (psf) based on the land area of 16,750 square feet. The bungalow's built-up area is said to be around 10,000 sq ft.
  • The buyer, who is expected to occupy the bungalow once the existing lease ends, is Fang Koh Look, founder of Absolute Kinetics Consultancy, an SME that provides workplace safety training and medical services in addition to distributing mobile pre-paid cards.
  • Over at Wilkinson Road, off Tanjong Katong Road, a fully owned unit of Soilbuild recently paid S$19.28 million for an old, two-storey bungalow. The price works out to S$1,203 psf based on the freehold land area of 16,031 sq ft.
  • The bungalow could be easily 40-50 years old, said Lim Chap Huat, executive chairman of Soilbuild, when contacted by The Business Times. "We are buying it from a family."
  • The site is zoned for two-storey bungalow use. Mr Lim said the group plans to redevelop the site into two brand-new bungalows. Work should start around the middle of this year and the new bungalows should be completed in about two years.

Realstar's Mr Wong estimates that GCB prices posted in Q1 this year were nearly 15 per cent lower than they were in the peak in 2013.

"Prices are gradually stabilising. However, a few GCBs sold below market valuation from late last year to Q1 this year would have an impact on overall GCB pricing. So there's likely going to be a further marginal drop of 2 to 5 per cent before prices stabilise by the fourth quarter of this year."

CBRE's Mr Wong also predicts "a very marginal price decline" at most for the rest of this year, citing a build-up in pent-up demand as well as the strong holding power among most owners.

He said: "When owners lower their price expectations, buyers who have identified a property they fancy will start biting, in the fear that someone else may beat them to it and they'll miss the boat to buy their dream home. It could then take them many more months to hunt for another another bungalow they like.

"When buyers jump into the market in this fashion, owners will start to hold prices."

Another GCB veteran, Newsman Realty managing director KH Tan, argued that prices have stabilised and in some cases, started going up last month, when the stock market began to recover.

Last month, he brokered the sale of a bungalow along Swettenham Close off Holland Road at S$1,354 psf on land area - higher than the S$1,258 psf fetched last November for a bungalow along Peel Road, just 100 m away.

Mr Tan said: "And don't forget, the Peel Road bungalow was built about four years ago, while the Swettenham Close house is around 25 years old."

Agents say the mood among buyers has improved lately, with a pick-up in viewings.

Mr Tan said: "We're receiving more serious offers, unlike in Q4 last year, when many potential buyers were still throwing low-ball numbers at owners.

"For the whole of this year, I'm predicting 5 per cent price growth."

CBRE Research expects 30 to 35 GCBs to be sold this year - similar to the 33 transactions last year.

The 2015 sales tally amounted to almost S$715 million and was an improvement from 2014, when 28 deals adding up to S$626 million were sealed.

Mr Wong of Realstar predicts 20 to 30 per cent growth in the number of deals this year, though the value of transactions may increase just 20 per cent, factoring in lower GCB prices in the earlier part of this year.

Agents told The Business Times that those in the market to buy a GCB include upgraders. Mr Tan of Newsman Realty said: "Some are moving from a smaller landed house or even an apartment, to a GCB.

"I'm working with several HNWI (high-net-worth-individual) Singaporeans who're switching from overseas property markets back to Singapore.

"They believe that following the price correction, prospects for high-end residences will be better in Singapore in the next two years vis-a-vis the UK, the US, Australia and Japan and Hong Kong, where they had previously focused on."

Some of these buyers include those who have become Singapore citizens in the past few years. "What they are doing now is looking to reduce exposure to the ABSD (additional buyer's stamp duty) for instance, by selling their existing properties here or transferring them to family members," Mr Tan added.

As for the profile of sellers, Mr Wong of Realstar has lately seen a number of people looking to divest their GCB because it has become too big for their needs, as their children may be working abroad.

Mr Tan said "in the past year, there have been more estates/trustees wanting to divest GCBs because of higher property taxes and weaker rents".

Among those who bought a GCB in Q1 this year was David Teo, chairman of listed Super Group. He is paying S$24.5 million or S$1,626 psf for a freehold property along Fifth Avenue off Bukit Timah Road.

This article was first published on April 22, 2016.
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