http://www.businesstimes.com.sg/real...as-prices-ease

Increasing buzz in GCB market as prices ease

Agents note that despite limited supply, prices have softened due to weak sentiment

Nov 28, 2015


THE Good Class Bungalow (GCB) market has been active lately with some owners lowering their price expectations, resulting in deals being sealed, say bungalow agents.

So far this year, 29 bungalows in GCB Areas have changed hands for a total S$645 million; this is slightly ahead of the 28 transactions totalling S$626 million for the whole of last year. In 2013, there were 29 deals that amounted to S$682 million.

Among the latest deals is a bungalow along Peel Road, near Swettenham Road, that was sold for S$19.5 million or S$1,258 per square foot based on the freehold land area of 15,504 sq ft.

Located in the Ridout Park GCB Area, the property has two storeys and a basement; it comes with five bedrooms and a study in addition to a home theatre room in the basement. There is also a swimming pool.

The total built up area is around 9,000 sq ft and the bungalow is believed to be about five years old.

Another deal, at Cable Road, was clinched for S$22 million or S$1,293 psf on the 17,013 sq ft freehold land area. The bungalow is located in a conservation area within the Chatsworth Park GCB Area. The buyer is understood to be the son of Oxley Holdings executive chairman, Ching Chiat Kwong.

The property has around 10,000 sq ft of built-up area covering two storeys and a basement. In all, the bungalow is said to have five bedrooms, an entertainment room, pool and garden. There is sufficient space to park six cars.

Agents acknowledge that despite the limited stock of GCBs on the island, prices have softened in the past year due to weak sentiment emanating from the global and local economic fronts. Knight Frank executive director Mary Sai recalled that when the total debt servicing ratio (TDSR) framework was introduced in late-June 2013, GCB prices were still resilient as buyers in this segment "do not need to borrow a lot", unlike the typical apartment or condo buyer. "But over the past year, GCB prices have trended downwards as both the global economic outlook and local economy are not so rosy."

"Morever, people do not anticipate a bounce back in GCB prices in the near future. So those who need to sell will sell according to what is the fair value . You cannot price too optimistically at this point; buyers are not rushing in as they are more cautious because they also believe that in this sort of enviroment, prices will weaken further."

While very well-heeled GCB investors will choose to rent out their properties, owners who need to sell - perhaps to "rebalance their portfolio" or because they may be seniors who are downsizing as they no longer require such a big home - have brought their price expectations down to a more realistic level.

Ms Sai estimates that transacted GCB prices have softened at least 10-15 per cent in the past year.

Realstar Premier Group managing director William Wong, too, said that "transacted prices these days are about 10-15 per cent lower compared to one year ago". On a positive note, there is more GCB activity as some of those who are searching for boutique bungalows in non-GCB Areas are willing to consider GCBs as well as that the price difference has narrowed.

"Let's take the Holland area for example. A boutique bungalow on say, 10,000 sq ft of land will cost S$15-18 million. If you buy a GCB with 15,000 sq ft land area, the price is in the low-S$20 million region."

GCBs are the most prestigious type of landed housing in Singapore because of the planning constraints imposed by the Urban Redevelopment Authority (URA), which has designated 39 locations on mainland Singapore as Good Class Bungalow Areas. GCBs have a minimum land area of 1,400 square metres (15,069 sq ft) and cannot be built more than two storeys high (including an attic and basement).