High-profile deals mask slower year for GCBs

The year has seen some high-profile transactions in the Good Class Bungalow (GCB) market but the total volume and value of deals done seem to be lagging the exceptionally high base last year.

Property agents attribute this to the uncertain business climate.

An analysis of URA Realis data by List Sotheby’s International Realty (List SIR) shows that so far this year, 34 deals totalling S$645.7 million have been sealed in GCB Areas. This is lower than the 38 transactions that amounted to S$933.3 million in the same period last year.

For the whole of last year, there were 42 transactions adding up to S$1.03 billion – the first time since 2011 that the S$1 billion mark was crossed.

Market watchers previously told BT that on top of the above transaction figures, for which buyers lodged caveats, there may be around S$400 million in deals done last year that were not caveated, which would bring 2018’s total tally to about S$1.4 billion.

So far this year, too, BT estimates that there are at least another S$500 million of transactions in GCB Areas that have not been reflected in URA Realis.

They include transactions that have not been caveated or for which caveats may have been lodged very recently but not captured in the Realis system due to a time lag. In addition, transactions of vacant land in GCB Areas are also not reflected in Realis. These take the total year-to-date figure to nearly S$1.15 billion.

(Typically, a buyer would lodge a caveat, which is a claim of interest in a property, after exercising the option to purchase. However, lodging of caveats is not compulsory.)

Examples of known transactions this year that have not been caveated include Wing Tai Holdings chairman Cheng Wai Keung’s S$230 million sale of a Nassim Road bungalow to an entity believed to be connected to Facebook co-founder Eduardo Saverin.

British consumer electronics maker Dyson’s founder, James Dyson, has also entered a deal to buy a bungalow in the Cluny area.

Bungalows in the 39 gazetted GCB Areas are the most prestigious form of landed housing in Singapore, with strict planning conditions stipulated by the Urban Redevelopment Authority (URA) to preserve their exclusivity and low-rise character.

Recent transactions include the mortgagee sale by Deutsche Bank of a bungalow in Belmont Road, for S$34.5 million. The price works out to S$1,278 psf on the freehold land area of 27,000 sq ft; the property is ripe for redevelopment.

The husband-and-wife team of David Chew and Leong Sook Ching, who used to control mainboard-listed The Stratech Group (now under liquidation), are the registered owners of the property.

The buyer is Woo Tsung Chwen, who is understood to be a member of the Tay family behind the OG Department Stores group. Mr Woo, who is about 40 years old, used to be involved with the Butter Factory Group. He is now a shareholder in a range of businesses including property, car rentals and F&B operator Coterie Dining Concepts.

Among recent transactions in GCB Areas that have been caveated and reflected in URA Realis is an old house in Maryland Drive, which has been sold for S$30 million or S$1,369 psf on land area of 21,912 sq ft.

List SIR head of research, Han Huan Mei, says it is not too suprising that GCB transactions this year are slightly slower than last year.”This is partly due to a price gap; with owners generally still asking high prices despite the weaker economy.

“From the viewpoint of buyers, who would include the top brass of companies, they may be adopting a cautious stance seeing weaker business conditions, and delaying their decisions.”

List SIR’s analysis of Realis data shows that average transacted price in terms of per square foot (psf) on land area has eased to S$1,373 psf year to date from S$1,515 psf in 2018. “This could be attributed to a higher number of older bungalows being sold this year (for redevelopment) compared to more newly built properties sold in 2018,” said List SIR executive director Lewis Cha.

Realstar Premier founder William Wong noted that this year, prices of GCBs in non-prime areas have dipped by around 5 per cent while those in prime areas have risen by 5 per cent. “So overall, the price has stabilised. In comparison, prices on the whole had appreciated by 3-5 per cent in 2018 over the previous year.”

According to Newsman Realty managing director KH Tan, GCB prices in ultra-prime locations such as Nassim and near the Botanic Gardens, have generally increased by around 10 per cent this year. Prices in the Bukit Timah area have softened, while those in the Holland belt remain stable, he added.

“Basically, now there are two groups of buyers. First are the new citizens, who are ready to commit when they find something they like. Their preference is brand-new bungalows in prime locations such as Nassim and near the Botanic Gardens; therefore prices in these areas have increased.

“Our local buyers tend to go more for the other GCB Areas, and they tend to be a bit more cautious to commit as the US-China trade issue is still ongoing. So when demand is slow, the price might be softer as compared to prime locations.”

Mr Wong of Realstar expects prices to stabilise next year. “The volume of transactions may increase by 10-15 per cent, barring any new cooling measures being introduced.

“The spin-off effect of more luxury condo units being sold in the resale market will be a positive stimulus for landed property including bungalows in GCB Areas – as some sellers will upgrade to landed housing. I also envisage more new Singapore citizens buying a property in a GCB Area,” he added.

However, Newsman’s Mr Tan expects the transaction volume next year to be similar to this year’s level. “Local buyers who have put purchases on hold because of the trade war will come back to the market after waiting for a year. New citizens who are ready to commit will be purchasing when they see something they like.”

List SIR’s Mr Cha also expects demand for GCBs in 2020 to remain at the current level of around 40 transactions. “The limited supply and rarity of large, well-located and well-built bungalows will support prices, with upside of around 5 per cent overall. However, should US-China trade tensions worsen, sales volume will fall and prices are likely to remain flat.

“The bright spot for the market is that GCBs are always able to attract the high-net-worth locals and newly minted citizens because of the prestige and status they command. The newly minted citizens are mostly from Asia, and are long-term property investors with strong financial backing; they are on the lookout for either newer GCBs or those with a good land size to rebuild.”

Mr Tan says the additional buyer’s stamp duty (ABSD) remains a major challenge in sealing deals. “Many potential buyers drop the idea of purchasing because of the ABSD for second and third property purchase is very high.”

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