New Reporter
27-10-23, 18:58
Good Class Bungalow rentals slip following money-laundering scandal
Oct 27, 2023
LANDLORDS of Good Class Bungalows (GCBs) have begun lowering rents, as demand from ultra-high-net-worth individuals falls in the wake of Singapore’s S$2.8 billion money-laundering bust.
Owners of these homes, which sit at the apex of Singapore’s residential property market, may also be taking longer to secure tenants.
In Singapore, there are an estimated 2,700 GCBs in 39 gazetted GCB areas.
According to data compiled by CBRE for The Business Times, median rents of detached houses in GCB areas fell 2.5 per cent in the third quarter, to S$4.60 per square foot (psf) by floor area.
Tricia Song, head of research for Singapore and South-east Asia at CBRE, said the dip stood out in contrast with median rents for semi-detached and terraced houses in GCB areas. The rents in these categories rose 4.1 per cent and 2 per cent respectively in Q3.
Median islandwide rents for detached homes were flat qoq, at S$4.08 psf.
List Sotheby’s International Realty research director Han Huan Mei noted that 40 bungalows in GCB areas have been rented out for at least S$50,000 per month in the first three quarters this year.
While this equals the number of bungalows in GCB areas leased out in 2022, Han said this was not surprising as rentals have already risen substantially since last year.
“We expect rentals to go down to a level that is more reasonable and acceptable going forward,” she said. “Most prospective tenants perceive that current GCB rentals are overpriced. They will take their time to hunt for more reasonable rentals as there are more available bungalows now.”
It now takes about two to three months to lease out a GCB, versus around a month in 2022, Han added.
Christine Yu, a director at International Property Advisor, said leasing momentum has slowed following the Aug 15 anti-money laundering blitz, as GCB owners are becoming “more realistic” and more willing to negotiate on rents.
Yu, who is marketing an Ewart Park GCB, said: “Before August, out of 10 enquiries for a GCB listing, I would have about eight from mainland Chinese-origin tenants. Enquiries from that profile have more than halved.”
Darren Teo, head of leasing at Realstar Premier Group, said: “It is much quieter at the top end of GCBs, that is, those with a monthly rent above S$100,000. Tenants who have the budget are not in the market at the moment. The asking rent for such GCBs has gone down as much as 20 per cent to 30 per cent.
“GCBs that previously commanded between S$40,000 to S$80,000 in monthly rent have experienced a 10- to 20 per cent fall in asking rents.”
Rental demand for brand new or newer GCBs remains high, though, as these are very rare, Teo noted.
Yu shared that landlords have become more prudent and expect their agents to be more thorough doing due diligence on prospective tenants. “Some property agents who request to view units and who have mainland Chinese clients have specified that their tenants are from provinces not associated with Fujian. For instance, they may specify that their client is from Beijing or Shanghai.”
The Straits Times recently reported that two GCBs linked to the S$2.8 billion money-laundering case are now vacant. One of them, in Nassim Road, has a land area of about 15,000 sq ft and was first listed on PropertyGuru on Oct 16 for rent. The five-bedroom property has an asking rent of S$120,000 per month.
It was previously occupied by Su Baolin, one of the 10 foreigners arrested on Aug 15 for suspected involvement in offences including money laundering and forgery.
Those arrested were staying in GCBs in Ewart Park, Bishopsgate, Third Avenue and Lewis Road, as well as in luxury condominiums.
Pockets of weakness are also showing up in the luxury condominium market, especially in Districts 9 and 10.
There were 1,272 non-landed residential rental transactions in both districts in September, a 20.6 per cent decline from the 1,603 in August, said Mogul.sg chief research officer Nicholas Mak. “In the Core Central Region, the number of rental contracts started to slip in August 2023 as a sign of weaker demand.”
Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said: “Rental prices may have risen too quickly over the past two years, and the price resistance affected demand. Many tenants shifted from the luxury market to other market segments for cheaper accommodation.”
Still, some large luxury condominiums units are seeing rents rise.
Across Districts 1, 9 and 10, the monthly condominium rents for five-bedroom units in the 75th percentile rose in Q3, said Alan Cheong, Savills Singapore’s executive director of research and consultancy.
Savills found that the five-bedroom unit at the 75th percentile in District 1 had a monthly rent of S$85,000.
Cheong noted that notwithstanding pockets of rental weaknesses by location and bedroom types, the rental market for non-landed private residential properties remains resilient.
Leonard Tay, head of research at Knight Frank Singapore, expects condominium rental increases to ease and stabilise for the rest of 2023, as supply increases moderately.
Tay noted that between 2014 and 2017, the number of private residential units completed was in the range of 16,000 to 20,000 each year.
This fell to 7,527 in 2019; 3,433 in 2020; 6,388 units in 2021; and 9,526 in 2022.
Tay said: “With about 19,000 units (expected) in 2023, this will bring relief to the private home market, which was undersupplied due to construction delays that resulted from the pandemic.”
https://www.businesstimes.com.sg/property/good-class-bungalow-rentals-slip-following-money-laundering-scandal
Oct 27, 2023
LANDLORDS of Good Class Bungalows (GCBs) have begun lowering rents, as demand from ultra-high-net-worth individuals falls in the wake of Singapore’s S$2.8 billion money-laundering bust.
Owners of these homes, which sit at the apex of Singapore’s residential property market, may also be taking longer to secure tenants.
In Singapore, there are an estimated 2,700 GCBs in 39 gazetted GCB areas.
According to data compiled by CBRE for The Business Times, median rents of detached houses in GCB areas fell 2.5 per cent in the third quarter, to S$4.60 per square foot (psf) by floor area.
Tricia Song, head of research for Singapore and South-east Asia at CBRE, said the dip stood out in contrast with median rents for semi-detached and terraced houses in GCB areas. The rents in these categories rose 4.1 per cent and 2 per cent respectively in Q3.
Median islandwide rents for detached homes were flat qoq, at S$4.08 psf.
List Sotheby’s International Realty research director Han Huan Mei noted that 40 bungalows in GCB areas have been rented out for at least S$50,000 per month in the first three quarters this year.
While this equals the number of bungalows in GCB areas leased out in 2022, Han said this was not surprising as rentals have already risen substantially since last year.
“We expect rentals to go down to a level that is more reasonable and acceptable going forward,” she said. “Most prospective tenants perceive that current GCB rentals are overpriced. They will take their time to hunt for more reasonable rentals as there are more available bungalows now.”
It now takes about two to three months to lease out a GCB, versus around a month in 2022, Han added.
Christine Yu, a director at International Property Advisor, said leasing momentum has slowed following the Aug 15 anti-money laundering blitz, as GCB owners are becoming “more realistic” and more willing to negotiate on rents.
Yu, who is marketing an Ewart Park GCB, said: “Before August, out of 10 enquiries for a GCB listing, I would have about eight from mainland Chinese-origin tenants. Enquiries from that profile have more than halved.”
Darren Teo, head of leasing at Realstar Premier Group, said: “It is much quieter at the top end of GCBs, that is, those with a monthly rent above S$100,000. Tenants who have the budget are not in the market at the moment. The asking rent for such GCBs has gone down as much as 20 per cent to 30 per cent.
“GCBs that previously commanded between S$40,000 to S$80,000 in monthly rent have experienced a 10- to 20 per cent fall in asking rents.”
Rental demand for brand new or newer GCBs remains high, though, as these are very rare, Teo noted.
Yu shared that landlords have become more prudent and expect their agents to be more thorough doing due diligence on prospective tenants. “Some property agents who request to view units and who have mainland Chinese clients have specified that their tenants are from provinces not associated with Fujian. For instance, they may specify that their client is from Beijing or Shanghai.”
The Straits Times recently reported that two GCBs linked to the S$2.8 billion money-laundering case are now vacant. One of them, in Nassim Road, has a land area of about 15,000 sq ft and was first listed on PropertyGuru on Oct 16 for rent. The five-bedroom property has an asking rent of S$120,000 per month.
It was previously occupied by Su Baolin, one of the 10 foreigners arrested on Aug 15 for suspected involvement in offences including money laundering and forgery.
Those arrested were staying in GCBs in Ewart Park, Bishopsgate, Third Avenue and Lewis Road, as well as in luxury condominiums.
Pockets of weakness are also showing up in the luxury condominium market, especially in Districts 9 and 10.
There were 1,272 non-landed residential rental transactions in both districts in September, a 20.6 per cent decline from the 1,603 in August, said Mogul.sg chief research officer Nicholas Mak. “In the Core Central Region, the number of rental contracts started to slip in August 2023 as a sign of weaker demand.”
Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said: “Rental prices may have risen too quickly over the past two years, and the price resistance affected demand. Many tenants shifted from the luxury market to other market segments for cheaper accommodation.”
Still, some large luxury condominiums units are seeing rents rise.
Across Districts 1, 9 and 10, the monthly condominium rents for five-bedroom units in the 75th percentile rose in Q3, said Alan Cheong, Savills Singapore’s executive director of research and consultancy.
Savills found that the five-bedroom unit at the 75th percentile in District 1 had a monthly rent of S$85,000.
Cheong noted that notwithstanding pockets of rental weaknesses by location and bedroom types, the rental market for non-landed private residential properties remains resilient.
Leonard Tay, head of research at Knight Frank Singapore, expects condominium rental increases to ease and stabilise for the rest of 2023, as supply increases moderately.
Tay noted that between 2014 and 2017, the number of private residential units completed was in the range of 16,000 to 20,000 each year.
This fell to 7,527 in 2019; 3,433 in 2020; 6,388 units in 2021; and 9,526 in 2022.
Tay said: “With about 19,000 units (expected) in 2023, this will bring relief to the private home market, which was undersupplied due to construction delays that resulted from the pandemic.”
https://www.businesstimes.com.sg/property/good-class-bungalow-rentals-slip-following-money-laundering-scandal