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Good year to buy GCBs
By Cecilia Chow / The Edge Property | March 4, 2016 11:00 AM MYT
Tags: GCB
Transactions in the Good Class Bungalow market picked up towards the latter part of last year, and signs are that the trend could continue this year. Nine GCBs were sold in 3Q2015 and another nine in 4Q2015, bringing the tally for 2H2015 to 18. This figure is higher than the 15 sold in 1H2015 and 13 sold in 2H2014.

“On the whole, sellers have lowered their expectations and they are more prepared to negotiate with potential buyers,” says Douglas Wong, head of luxury homes, CBRE Realty Associates. “There is still a healthy level of interest in this class of property.”

Wong sees the softening prices of GCBs as a window of opportunity for high-net-worth individuals — “particularly younger end-users in their late-30s” — to own their first bungalow.

For this group of GCB buyers, the wait for sellers to lower their price expectations has paid off in this property downturn, he adds.

This year, the GCB market is likely to remain measured because of weaker economic conditions and rising interest rates, reckons Wong. He expects that 25 to 35 GCBs will be sold this year, as the price gap between sellers and buyers narrows further. Last year, a total of 33 GCBs were sold for $714.8 million, compared with 28 in 2014 for $626 million, and 29 in 2013 for $682 million. Average GCB prices fell 5.3% y-o-y from 2014 to 2015, and the expectation is that it could ease another 5% in 2016, according to CBRE data.



More motivated sellers
Mary Sai, executive director of investment and capital markets at Knight Frank, says: “The higher number of transactions in 2H2015 compared with 1H2015 was probably because some owners who had been hoping that the ABSD [additional buyer’s stamp duty] would be lifted [realised] that it wasn’t going to happen anytime soon. Because of weakening economic conditions, they lowered their price expectations. These are the pragmatic sellers who believe it is better to achieve a sale and cash out now than to hold on.”

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