GCB deals hit S$220m in third quarter

Singapore

TRANSACTION volumes of bungalows in Good Class Bungalow (GCB) Areas have held up in the third quarter against the latest property cooling measures which took effect on July 6.

Based on an analysis by List Sotheby's International Realty (List SIR) of URA Realis caveats data as of last Friday, there were 11 transactions in GCB Areas, totalling S$220 million in Q3 2018 - up from the eight deals amounting to S$169.1 million in Q2 and also ahead of the seven deals worth S$123.1 million in Q3 of last year.

One of the latest deals involves the former residence of late pioneer artist Chen Wen Hsi along Kingsmead Road in the Victoria Park GCB Area. The freehold property is in the early stage of being sold for S$15 million or S$1,580 per square foot on the freehold land area.

Another recent transaction, along Woollerton Drive near Farrer Road MRT Station, was done at S$16.6 million or S$1,685 psf on land area.

The biggest transaction in Q3, reported earlier by The Business Times (BT), is that of a bungalow in Belmont Road being sold for S$43.5 million or S$1,430 psf on land area of 30,420 sq ft. The buyer is Shangri-La Asia chairman Kuok Hui Kwong.

Leong Boon Hoe, chief operating officer of List SIR Singapore, attributed the increased transactions in Q3 to some owners who had been holding on to their asking prices accepting offers on the table following the July cooling measures.

Some market observers also suggest that a few of the caveats lodged in Q3 2018 may have been for deals entered into before the cooling measures.

Bungalows in GCB Areas are the most prestigious form of landed housing in Singapore, with strict planning conditions stipulated to safeguard their exclusivity and low-rise character. There are only about 2,500 bungalows in 39 GCB Areas.

A seasoned GCB agent told BT that following the July cooling measures, viewings were down, though things have started to pick up in the past two weeks.

"Potential buyers have adopted a wait-and-see approach, hoping to acquire a good property at lower prices.

"However, owners of GCBs with strong attributes - such as a well-designed house with good layout and on a regular-shaped, upward-sloping site - are holding their asking prices, which buyers cannot match. On the other hand, those who own less attractive GCBs are lowering prices, but buyers are not interested."

Another GCB specialist, Realstar Premier Group founder William Wong, said that as was the case with earlier rounds of cooling measures, the buyer-seller price gap has generally widened following the latest measures. "The only bright spot is brand new GCBs from developers where the price gap is still within a do-able range to ink a deal - resulting in more activity for this segment.

"Because there is a three-year deadline to finish developing and selling off the landed house, GCB developers are most receptive to listen to genuine, realistic offers, even though these may not be up to their expected price," said Mr Wong.

He noted that developers seeking bare land or a site with an old bungalow for redevelopment are making offers far below the market price - as they now need to factor in the new 5 per cent non-remittable additional buyer's stamp duty (ABSD) payable upfront when buying housing development sites.

"Some GCB developers, especially new set-ups, will likely stay away for some time as the profit margins are no longer as attractive, once you take this 5 per cent tax into consideration."

In the first nine months of this year, caveats were lodged for a total of 28 transactions in GCB Areas totalling S$639.2 million - up from the tally of S$587 million in the year-ago period, based on List SIR's analysis.

Observers say the actual year-to-date GCB numbers may be higher as some buyers did not lodge caveats, but their transactions were completed and the property title transferred to them this year.

Typically, a buyer would lodge a caveat, which is a claim of interest in a property, after exercising the option to purchase. However, lodging of caveats is not compulsory - unlike registration of title which has to be lodged by the new owner when a transaction is completed.

BT understands that transactions completed this year without caveats from buyers include properties along Nassim Road, Cluny Hill, East Sussex Lane and Lornie Road.

The Nassim Road bungalow changed hands for S$44 million or S$2,625 psf of land area. On site is a two-storey house completed 19 years ago but which is well maintained and in liveable condition. The Singaporean buyer of this property, who is in his twenties, is understood to be a member of a family linked to Winson Oil Bunkering and Winson Group International.

In Cluny Hill, an old two-storey bungalow has transacted at S$22 million or S$1,482 psf on 14,843 sq ft land area. The new owner, in her early 20s, is a member of the family that owns boutique developer Soh International Holdings.

Over in East Sussex Lane in the Holland Rise GCB Area, a doctor has bought a 17,315 sq ft empty site for about S$18.3 million or S$1,056 psf and is expected to build a bungalow on it. In Lornie Road, within the Caldecott Hill Estate GCB Area, a brand-new bungalow was sold for S$25 million or S$1,066 psf on freehold land area of 23,451 sq ft, to Lim Eng Koh, a shareholder of fashion apparel group BYSI International.

Realstar's Mr Wong expects GCB activity to pick up in October and November before slowing down in December for the year-end holiday season.

Said Mr Leong of List SIR: "While GCB deals are likely to take longer to stitch following the latest cooling measures, seasoned and long-term investors understand that such measures will help support long-term, sustainable price increases.

"Looking ahead, we expect GCB buyers to be primarily owner occupiers; investors will remain on the prowl but only for the best properties that come on the market."