The Business Times - January 14, 2014
By: Kalpana Rashiwala
MARKET watchers are hopeful that activity in the Good Class Bungalow Areas will pick up from the second quarter following a slow 2013, which saw the number of transactions halve to 27 deals worth $650 million from 54 deals totalling $1.17 billion in 2012.
The first quarter is expected to be quiet as potential buyers continue to monitor the market, although what is believed to be the first deal has been inked.
An option is said to have been granted earlier this month for the purchase of a property in East Sussex Lane off Holland Road.
The price is believed to be $22.5 million - which works out to $1,490 per square foot based on the freehold land area of 15,102 sq ft. It was launched for sale last year with a $25 million "guide price".
The buyer is understood to be a doctor, who plans to live in the property. The seller is believed to be the Singaporean owner of Euro Group, headquartered in Hong Kong.
Besides property development, it is involved in executive search, investments, marketing, events and conferences.
CBRE and Jones Lang LaSalle are understood to have brokered the deal.
Euro Group is understood to have developed the bungalow, which was completed in 2006. The two-storey house has a basement and attic/roof terrace. Its total built-up area is about 11,500 sq ft.
It has a luxurious living area that leads from a koi pond at the front. A patio overlooks a 27-metre infinity lap pool at the back.
The basement family area features a state-of- the-art home theatre, billiard room and accommodation for domestic helpers. There are six fully furnished ensuite bedrooms complete with built-in furniture and beds.
The master bedroom has a walk-in wardrobe, twin jacuzzis and steam bath. The upper level of the property comprises an attic housing a gym that opens up to a flat roof-garden with timber platform.
Last year's halving in transaction volumes in Singapore's Good Class Bungalow Areas was amid a sharp slowdown in the second half - following the introduction in late June of the Total Debt Servicing Ratio (TDSR) framework.
This stipulates that financial institutions, when granting property loans to individuals, have to ensure that the borrower's monthly total debt repayments do not exceed 60 per cent of his gross monthly income.
RealStar Premier managing director William Wong said: "The reason for the big drop in GCB transactions is not just the TDSR but buyers holding back in the hope of owners cutting prices. But most owners are deep-pocketed and have strong holding power.
"GCB prices have not been affected much by TDSR; they may have softened quite marginally by a couple of per cent since last June. In contrast, for smaller bungalows (in non-GCB Areas) and semi-detached houses, the price decline has been more pronounced, around 5-8 per cent."
Newsman Realty managing director KH Tan too estimates the average drop in GCB prices at "less than 5 per cent, depending on location".
"Both volumes and prices are likely to remain soft in the first quarter. Because of TDSR, potential buyers want to look and see if sellers will lower prices. If prices don't drop much and if the right property comes along, they will commit."
Mr Tan predicts that transactions would recover in Q2 and Q3. "If that happens, prices will start to stabilise," he added.
For the full year, the number of transactions is expected to match last year's.
Mr Wong expects landed housing transactions as a whole to pick up this year. "In the GCB market, after waiting a few months when buyers find that prices have not dropped, those who are ready will start to commit. For smaller bungalows and semi-Ds, prices have dropped to a level where it looks reasonable for them to invest long term."
Douglas Wong, head of luxury homes at CBRE Realty Associates, predicts 30-35 transactions in GCB Areas totalling $700 million for 2014. The record year was 2010, when 133 deals amounting to $2.4 billion were sealed.
Agents reckon that potential buyers would try to find a way to operate within the system - such as selling an existing property first before entering into a GCB purchase.
This way, they may save on additional buyer's stamp duty in addition to qualifying for a bigger loan.
Said Newsman's Mr Tan: "These days, I am seeing quite a few new Singaporeans, along with more established citizens, looking at GCBs. Typically aged 40-plus, they include developers and businessmen.
"They may be living in a smaller bungalow in a non-GCB Area or a luxury condo and looking to upgrade."
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