Good class bungalow market chalks up more gains
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Published August 15, 2006
Good class bungalow market chalks up more gains
Prices up 11.5% in first half of '06; 10% of buyers are PRs: Knight Frank
By ARTHUR SIM
(SINGAPORE) The highest end of the residential property market - good class bungalows (GCBs) - continues to improve, with an increase in the number and total value of transactions recorded in the first half of this year.
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According to a report by Knight Frank and its GCB arm Regal Homes, the number of transactions has hit 40, an increase of 14 per cent over the corresponding period in 2005, while the total value has increased 24 per cent to $386 million.
Knight Frank's director of research and consultancy Nicholas Mak says the average price of GCBs increased by about 11.5 per cent in the latest half-year from $8.7 million in 2005 to $9.7 million.
Knight Frank's data is based on an analysis of caveats lodged, and Mr Mak says that the transactions include both the resale market and the sale of new GCB development sites. 'Currently, there are about 2,500 GCBs islandwide. In the next 12 months, the number will not change much as there may be only less than 10 new GCBs created every year,' he said.
Demand is said to be mainly from Singaporeans, although Mr Mak noted: 'With the relaxation of curbs on foreign ownership of landed property in Singapore, it was observed that there is a rise in the number of permanent residents (PRs) buying GCBs.' He believes they make up about 10 per cent of the buyers.
A check with the Singapore Land Authority reveals there has been no relaxation on requirements for foreigners buying landed homes.
The Economic Development Board does however have an incentive scheme to attract high net-worth individuals to get PR status here by allowing for half of a minimum $2 million approved investment to be used for residential property.
The number of PRs and foreigners who own landed property in Singapore is not known, but official figures from the Urban Redevelopment Authority (URA) reveal that for Q2 06, seven out of eight buyers of uncompleted detached houses were foreigners.
Figures from the Inland Revenue Authority of Singapore show that as of April 1, 293 foreigners owned completed detached houses while PRs owned 85.
On the URA's figures, Mr Mak believes that the numbers probably reflect transactions of bungalow plots at Sentosa Cove. 'One or two could be for GCBs (on the mainland) but we cannot be certain,' he added.
Regardless of who is buying, Mr Mak believes that GCB prices are likely to be sustained for the rest of the year and could possibly even increase further.
Currently, GCB land prices in Nassim Road and Cluny Hill range between $580-$620 per square foot. But recent resale activity could put upward pressure on prices.
'A notable transaction was the sale of a GCB in Queen Astrid Park which was transacted at $12.5 million in April and subsequently resold again for $16 million in May,' Mr Mak said.
Also in April, SC Global's Simon Cheong sold for $9 million one of six freehold Peirce Road bungalows he bought for an average price of $5.83 million three months earlier.
Savills Prestige Homes and Investment Sales director Steven Ming has also seen some fast turnovers in the GCB market with a property in Belmont Road bought and resold in the first six months of this year for a 13 per cent profit.
Savills is currently marketing two adjoining sites in Cornwall Gardens measuring a total of 71,000 square feet. It can be subdivided in four GCB plots, and Mr Ming says he expects prices to hit $550 psf per plot or almost $39 million for the whole site.
