Spotlight on good-class bungalows

2010 has been an impressive year for the landed housing segment, with prices rising 23 per cent in the first three quarters, including a 7.7-per-cent increase in the third quarter from the second.

Amid the outstanding overall results, the superlative in the landed housing segment – good-class bungalows (GCBs) – continued to shine. GCBs are essentially detached homes sitting on at least 1,400 sq m of land, in 39 designated areas such as Swettenham Road, White House Park, Nassim Road and Chatsworth Park.

Although the number of transactions of GCBs in the first 11 months of the year was similar to the corresponding period last year, the value transacted climbed to a new record high of $1.69 billion.

This is 18 per cent above the value of GCBs transacted in the whole of last year, the previous historic high.

The most striking achievement is that on a psf of land basis, the $1,052 average price of GCBs transacted this year reflected a 28 per cent increase in the first 11 months of the year.

This price rise was above a corresponding 25 per cent average annual increase for all landed residential properties.

Some GCBs have been sold repeatedly over the years, reflecting sustainable capital appreciation in this premium segment.

For example, a GCB in Nassim Road changed hands five times in the past six years – beginning from a transaction at $405 psf of land in Feb 2005 to a fifth in April this year at $1,800 psf of land.


GCB values, fundamentally underpinned by limited supply, have been given a further boost on the demand side from buyers who are increasingly discerning and contesting for homes with special selling points for future appreciation.

Moreover, with prices already at record highs, the cost of a home for a purchaser is becoming a secondary concern compared to the potential for capital appreciation.

GCBs, which are at the highest rung of private homes and which are unlikely to see a major rise in new completions, will be among the safest buys for a purchaser who is not burdened by affordability concerns.

A GCB, exclusive and rare in supply, is thus felt to offer more room for capital gains.

Singapore has embraced vertical city living over the past decade due to land scarcity. Developers’ offerings are predominantly non-landed residential properties and choice landed homes, including some at off-the-beaten locations, are becoming more and more attractive.

Notwithstanding developers’ efforts to brand condominiums with innovative concepts, such homes are fairly homogenous and the exclusivity is at most “development specific”, i.e. there will be at least several similar units in a development with similar designs.

In contrast, buyers of GCBs will be able to customise their homes to be materially different from another.

Although many landed homes are not in a central location, i.e. close to major transport nodes, they will still be prized by those who value privacy and an exclusive environment, away from major activity areas and town centres.

Landed homes in off-the-beaten places may continue to receive buying interest predominantly for owner occupation, from those who wish to have differentiation between work and leisure.

The merit of GCBs is that many of such homes are centrally located, further enhancing their appeal to potential buyers of landed housing.

Some buyers are also interested in the redevelopment potential of the land on which the GCB sits.

GCB owners are often property connoisseurs who will only part with their home if prices significantly exceed personal value.

But while the limited supply will support price increases, buyers will not be hasty as a GCB purchase is a major decision.


Landed homes are also not likely to be significantly affected by the Government’s efforts to cool the overall housing market.

This segment of the market is different from the non-landed residential sector as it appeals to buyers who are not burdened by affordability concerns and the case for Government intervention to ensure prices are affordable is weaker.

And if prices are suppressed, these properties will become even more attractive and the buying interest for such special value buys may further increase, notwithstanding new restrictions.

Going into 2011, the price increase for GCBs is expected to continue, backed by the sustained economic recovery and rising awareness of GCBs as special value buys.

But the rate of capital appreciation is set to slow to an expected 3 per cent per quarter increase next year, as higher prices face increasing resistance even as the product offerings are unique.

By Ong Kah Seng, Senior Manager, Research – Asia Pacific at Cushman & Wakefield.

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