High-net-worth individuals (HNWI), revving up the purchases of Good Class Bungalow (GCB) could have caused the GCB market to perk up. Around 20 GCB transactions with a worth value of over $300 million were seen in the action-filled month of July. Putting this in standpoint, Q1 2009 only had $27.5 million worth of GCB deals.
April started the revving up of deals as GCBs totalling to $56 million were transacted. The peak profit came within the next two months, with each month having deals worth more or less $188 million, and by July, the GCB market went ballistic. Based on information on the newest transactions collected by BT and on caveats data amassed by property consultants, there were about 50 GCBs that have been transacted so far. More than $800 million were recorded in the year-to-date tally, which indicated that the GCB market is strong, taking into consideration last year’s $830 million worth of 51 deals.
GCB agents estimated that the sales will continue to flourish in the upcoming months. “It’s likely that a total of 60-65 GCBs will be sold in the whole of 2009 – more than the 51 GCBs sold in 2008. The total quantum is likely to be around $1.1 billion to $1.2 billion, about 35-45 per cent higher than the quantum of $830 million in 2008”, said Douglas Wong, CB Richard Ellis’s director (luxury homes).
“Although we do not expect the spike in GCB sales that was seen in May to July to be sustained, we do expect to still see healthy buying activity continue for the rest of the year”, said Steven Ming, director of investment sales & prestige homes at Savills Singapore. Mr. Ming anticipates that for the current year, there will be 60–70 transactions. He also mentioned that deposit rates and low mortgage had caused the revival in GCB market, besides the notion that the financial crisis had already ended.
KH Tan, managing director of Newsman Realty, agreed with this and remarked that HNWIs chose to invest in GCB so as to let their money be idle in banks. Mr. Tan also added that HNWIs were cautious to invest in financial products after the collapse of Lehman Brothers.
“Another group of GCB buyers are foreigners who have become Singapore PRs and PRs who have become citizens”, Mr. Tan said, who had just brokered the Cluny Park bungalow sale worth $38 million. “When the IRs (integrated resorts) are ready, even more rich people from overseas will come to Singapore and become citizens. Some would be interested to invest in the GCB market”, he said.
A person who wished to own a GCB must be a Singapore citizen first. Nevertheless, the government had granted rights to PRs to purchase small GCBs (having around 15,000 square feet of land areas), depending on what they had contributed to Singapore, Mr. Tan said.
Recently, top GCB deals included the selling of a site situated in Dalvey Road for $27.01 million by a broker named Thomas Chan Ho Lam. Amusingly, a bungalow located in Belmont Road worth $30.5 million was believed to have been bought by the same person from Ong Kok Thai, Peranakan Place Group and Vanguard Interiors’ managing director.
Meanwhile, developer Simon Cheong had bought the 2 Swettenham Road bungalow worth $29.2 million from George Quek, chairman and founder of BreadTalk. Sat Pal Khattar, GuocoLand chairman, was said to have sold a bungalow located in Rochalie Drive worth $18.32 million.
It was in 2006 when the GCB market hit the highest point with $1.23 billion worth of 119 deals. Based on the CBRE data, 2007 had $1.15 billion involving 87 deals. The initial seven months of 2009 saw $710 million worth of 47 deals, said CBRE.
In spite of this, BT understood that around 6 other deals were not included in caveats, situated in places such as Maryland Drive, Astrid Hill and Belmont and Leedon roads. The year-to-date tally would have been about $800 million, had they had been included.
The housing market of Singapore’s creme de la creme was GCBs. The gazetted GCB Areas in Singapore only had around 2,400 of such bungalows.
For the coming 12 months, Mr. Tan expects that there will be around 20 percent increase on average in GCB prices.
“GCBs, being limited in availability, are a highly sought-after investment among the well heeled. As more rich are created, demand for these exclusive bungalows will gradually outstrip available supply for sale”, said Mr. Ming of Savills.