Value of deals in GCB areas rises to five-year high

Value of deals in GCB areas rises to five-year high

40 transactions last year, up from 37 in 2016, with total value up 8.4 per cent to S$855.14 million from S$788.53 million in 2016

Sat, Jan 06, 2018

Kalpana Rashiwala

http://www.businesstimes.com.sg/site...?itok=jPJgJjF8
A two-storey bungalow in Rochalie Drive, with six bedrooms and a pool went for S$33 million or S$1,968 psf.
PHOTO: FILE

http://www.businesstimes.com.sg/site...?itok=_M_iOWWA
RSP Architects Planners and Engineers founder Albert Hong sold a property in Bukit Tunggal Road for S$26.5 million or S$1,302 psf on freehold land area of 20,355 sq ft.
PHOTO: BT READER

THE number and value of transactions in Good Class Bungalow (GCB) areas in 2017 rose to their highest levels in five years, based on a preliminary analysis of caveats data as of Jan 5.

CBRE's analysis showed there were 40 transactions last year, up from 37 in 2016, with the total value of deals up 8.4 per cent to S$855.14 million from S$788.53 million in 2016.

Sentiment in the sector is set to improve this year. "Pent-up demand seems to be getting stronger, and the gap between buyers and sellers' expectations is beginning to narrow," said Douglas Wong, head, luxury homes at CBRE Realty Associates, who specialises in GCBs.

Realstar Premier Group founder William Wong said: "There is a lot of demand for GCBs from prospective buyers; the only challenge is there are not many owners prepared to put their homes on the market."

Leong Boon Hoe, chief operating officer of List Sotheby's International Realty, said: "The total value and volume of deals for 2018 will depend a lot on what is available for sale in the market as there only 2,900 bungalows in the 39 Good Class Bungalow Areas (GCBA) designated by the Urban Redevelopment Authority."

This segment is the most prestigious category of landed housing in Singapore, with strict planning conditions to preserve their exclusivity and low-rise character.

Last year saw a record price being set in terms of per square foot (psf) on GCBA land, when a bungalow in Cluny Hill near the Botanic Gardens changed hands for S$2,350 psf - smashing the previous record of S$2,190 psf set in 2015 for a bungalow in Bishopsgate.

Recent GCBA deals include RSP Architects Planners and Engineers founder Albert Hong's sale of a property in Bukit Tunggal Road for S$26.5 million or S$1,302 psf on freehold land area of 20,355 sq ft.

The buyer is understood to be Chuan Holdings' chairman Lim Kui Teng. The Singapore-headquartered, but Hong Kong-listed, group is involved in earthworks and general construction. The company was listed on the main board of the The Stock Exchange of Hong Kong (HKEx) in June 2016.

Another entrepreneur who successfully launched an IPO in Hong Kong - Kuah Ann Thia, chairman and chief executive of Kakiko Group - bought an old bungalow in Lermit Road in District 10 for S$28.3 million or S$1,629 psf. The property is ripe for redevelopment, say observers.

Kakiko Group is a service provider of manpower outsourcing and ancillary services to building and construction contractors in Singapore. The company began trading on the main board of HKEx in October last year.

In Rochalie Drive, a two-storey bungalow wth six bedrooms and a pool was sold for S$33 million or S$1,968 psf. The bungalow was built a couple of years ago.

Mr Wong of Realstar estimates that prices of GCBs eased around 17 per cent from the peak in late 2013 to mid-2017 before starting to increase by up to 5 per cent in the second half. He expects prices to appreciate a further 5 to 7 per cent this year amid the upbeat mood.

He sees demand for GCBs from other relatively young Singapore entrepreneurs whose funds for the purchase may be from an IPO of their companies - in Singapore or overseas.

Well-heeled newly minted citizens will also continue to support GCB purchases. Under a policy change that took effect in the second half of 2012, only Singapore citizens are allowed to buy landed residential properties in GCB areas.

Mr Wong is also confident of demand from those upgrading from smaller bungalows outside the GCBA.

He said among those who sold their homes through collective sales last year, about 15 per cent may be looking to buy a landed property this year as a replacement.

"This is also good news for some bungalow sellers who will likely be able to sell their property and upgrade to a GCB."

Agents say the pick-up in the value of GCBA deals last year was amid pent-up demand from buyers, some of whom had been house hunting or waiting on the sidelines for up to a couple of years.

The 2017 uptick came amid overall improvement in sentiment in the Singapore residential property market as well as a more upbeat mood about Singapore's economic performance.