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Published October 8, 2011

Activity thins in Good Class Bungalow market

Fewer than 10 deals said to have been sealed in Q3

By KALPANA RASHIWALA


ACTIVITY in the Good Class Bungalow market thinned in the third quarter, with fewer than 10 deals said to have been sealed.


FREEHOLD BUNGALOW
This house at Binjai Hill changed hands last month for $22.38m. The buyer is understood to be related to Yanlord Land's chairman, who owns a GCB next door.


However, some agents are optimistic that the buyer-seller price gap will start to narrow, which will end the stalemate seen in the most part of Q3 and lead to more deals in Good Class Bungalow Areas in the next three to six months.

CB Richard Ellis' analysis of caveats data shows that five deals totalling $83.6 million were transacted in Q3 2011. In addition, agents told BT that there were another two bungalows in GCB Areas sold for a total $46 million in Q3 for which caveats have yet to be lodged and which would take the total for Q3 to about $130 million.

Still, this would mark a sharp slowdown from $410.3 million of transactions in GCB Areas in Q2 and $392.4 million in Q1 However, the final tally for Q3 may increase as more caveats are lodged.

The 46 bungalows in GCB Areas totalling $886.3 million for which caveats have been lodged in the first nine months of this year are about half the 91 deals totalling $1.65 billion in the same period last year. CBRE director (luxury homes) Douglas Wong is clipping his full-year 2011 forecast to some 50-60 deals for a total $1.2-1.3 billion - from his earlier forecast in July of about 60-70 GCBs that may fetch about $1.4-1.5 billion. Last year, a record 121 deals totalling $2.27 billion were sealed.

CBRE's Mr Wong points out that while sales volumes have thinned, the average price in terms of per square foot of land area for GCBs transacted so far this year is $1,228 psf - nearly 13 per cent higher than the $1,087 psf for the whole of last year. 'GCB prices are still on an uptrend because of their scarcity value,' he added

'Going forward, weaker sentiment will prevail as a result of the debt crisis in Europe and slower global economic growth. We expect the GCB market to move at a cautious pace.'

However, RealStar Premier Group managing director William Wong is optimistic about an increase in the number of GCB deals over the next three to six months 'as the price gap between seller and buyer starts to narrow'.

'We're beginning to see better momentum for GCB activities as some of the sellers now are more receptive to offers made by buyers and are prepared to adjust their prices in view of the market. There are more GCB viewings, with buyers entering the market to see if they can get a reasonable deal, which they could not get last year or the earlier part of 2011.'

Market watchers note that in July-September this year, GCB sales thinned due to a widening buyer-seller price gap following the turmoil in global financial markets; sellers refused to budge on asking prices while buyers were looking for price declines.

One of the bigger GCB deals in Q3 is the $22.38 million purchase last month of a bungalow at Binjai Hill which works out to $1,184 per square foot based on the freehold land area of 18,902 sq ft. The buyer is understood to be related to Yanlord Land Group chairman and CEO Zhong Sheng Jian, who owns a bungalow next door. Mr Zhong as well as the buyer in the latest transaction are Singapore citizens.

The two-storey freehold house is understood to be over 30 years old, although it has been refurbished. It has five bedrooms, a maid's room and swimming pool. Sources say CBRE's Mr Douglas Wong brokered the deal.

Another deal is a $19.25 million transaction at Holland Park, which works out to to around $1,335 psf based on land area of slightly more than 14,410 sq ft.

A caveat for 10 Andrew Road has also been lodged. The deal, in September, was for about $11.12 million or $979 psf on land area of about 11,357 sq ft.

Then there was a GCB at Gallop Park on 18,885 sq ft land area which was sold for $23.5 million, or $1,246 psf on land area. The two-storey house comprises four bedrooms, a study room, a store room and a maid's room. It is on a cul de sac and has a treehouse and a swimming pool. The deal was brokered by RealStar. The buyer is understood to be in his thirties and involved with the tiles, stones, wood flooring and sanitary ware business,

A two-storey GCB at Bukit Tunggal on 16,356 sq ft of land is said to have changed hands for about $22.5 million.

In July, No 6 Chatsworth Road, diagonally opposite the Indonesian Embassy, was sold for $2,081 psf on land area - slightly above the previous record of $2,038 psf for 16 Cluny Road set in February this year. The $22 million Chatsworth Road bungalow is on land of 10,571 sq ft - much smaller than the typical minimum GCB plot size of 1,400 sq metres (15,069.46 sq ft).

When GCB Areas were gazetted in 1980, they included some smaller existing sites. These are still considered GCBs as they would be bound by the other GCB planning rules if they were to be redeveloped. For instance, such plots cannot be further sub-divided and they cannot be built more than two storeys high (plus an attic and a basement).

Over in the waterfront housing district of Sentosa Cove, there have also been several bungalow deals in the third quarter. A property along Cove Drive facing the golf course and waterway was sold for $17.9 million or $2,613 psf on land area.

Two bungalows on Paradise Island also changed hands - one in August for about $19.78 million or $2,165 psf and the other in July for $13.8 million or $1,881 psf. A bungalow on Treasure Island sold for $16.08 million or $1,910 psf.