Buoyant times for luxury homes in safe-haven Singapore

Entrepreneurs associated with the technology boom feature prominently among buyers of houses in GCB areas this year

Oct 05, 2021

WHILE the Covid-19 pandemic rages on, there have been several eye-popping transactions of coveted landed homes in Singapore’s Good Class Bungalow (GCB) areas this year. A record price of S$4,005 per square foot (psf) on land area was set when Jin Xiao Qun, the wife of Nanofilm Technologies International’s founder and executive chairman Shi Xu, bought a 32,159 square feet (sq ft) freehold site with an old bungalow in Nassim Road for S$128.8 million.

Entrepreneurs associated with the technology boom have featured prominently among buyers of houses in GCB areas this year. Razer’s co-founder and chief executive Tan Min Liang; TikTok’s chief executive Chew Shou Zi; gaming chair maker Secretlab’s co-founder Ian Ang; and Tommy Ong, who sold his Singapore-based e-commerce marketing platform Stamped.io, are among the buyers of bungalows in GCB areas.

Chloe Tong, wife of Grab’s co-founder and CEO Anthony Tan, purchased a home in the Bin Tong Park GCB area for S$40 million. Bungalows in the 39 gazetted GCB areas are the most prestigious landed housing in Singapore, with strict planning conditions stipulated by the Urban Redevelopment Authority (URA) to preserve their exclusivity and low-rise character.

GCBs are typically restricted to Singapore citizens, unlike landed homes in Sentosa or high-end condominium units anywhere in Singapore, where foreigners are free to buy. Analysis of URA Realis caveats data downloaded on Sept 14 by List Sotheby’s International Realty (List SIR) showed 70 transactions in GCB areas totalling S$2.08 billion since the start of this year (with the latest deal dated Sept 2). This figure exceeds that for the whole of last year – 46 deals totalling S$1.09 billion.

According to CBRE, average land prices of GCB transactions rose around 22 per cent in H1 2021 to S$1,728 psf, compared to 2020. The property consultancy noted that GCB activity was boosted by fresh demand from digital economy entrepreneurs and key executives, and continued demand by new citizens.

LIST SIR’s executive director Lewis Cha expects the total tally of bungalow deals in GCB areas to reach 80 or more this year. Although this number would be lower than the 120 deals in 2010, Mr Cha believes the total value in 2021 could match or exceed the record of S$2.24 billion achieved in 2010, as the price per bungalow is much higher now.

Outside of GCB areas, a Chinese national bought a sea-facing bungalow in Sentosa Cove for slightly over S$39.3 million, which works out to nearly S$2,012 psf, based on the land area of 19,550 sq ft, earlier this year.

According to CBRE, 13 Sentosa Cove bungalows were sold in H1 2021 with investment value totalling S$219 million, which exceeds that in H2 2020 by 67 per cent.

The luxury condominium market has also seen attention-grabbing deals this year. List SIR said that based on caveats lodged from the beginning of 2021 to August, 12 penthouses were sold in the Core Central Region (CCR), raking in a total of S$239.4 million. This tops the performance in 2020 when 10 penthouses were sold for a total of S$220.3 million.

IN March, SC Global Developments sold a five-bedroom, 8,385 sq ft penthouse at freehold project Hilltops in Cairnhill Circle for S$33.5 million (S$3,995 psf). According to List SIR, all three penthouses at Shun Tak’s newly launched ultra-luxury Park Nova on Tomlinson Road were sold at a rate of S$5,300-S$5,800 psf. Penthouses have been sold at 99-year leasehold Irwell Hill Residences and Midtown Modern for S$4,100-S$4,200 psf.

Caveats lodged this year for condos that fetched top dollar include two units that sold for S$35 million (S$5,786 psf) and S$39 million (S$5,930 psf) at the lowrise 14-unit Les Maisons Nassim in Nassim Road.

There were 102 caveats lodged for luxury apartments in the CCR with a total investment value of S$1.42 billion in H1 2021 at an average price of S$3,824 psf, according to CBRE. Perhaps the luxury home deal that stands out most this year is the purchase by the Tsai family of Taiwan, who are behind snack food giant Want Want China Holdings, of all 20 apartments in Eden at 2 Draycott Park.

Developer Swire Properties of Hong Kong sold the units for S$293 million or around S$4,827 psf.

Growing wealth in Asia and Singapore, coupled with Singapore’s strong standing among the rich, is driving demand for luxury homes here.

While the pandemic is wrecking economies, some businesses are prospering and segments of the wealthy have grown richer. Forbes found a record 2,755 US-dollar billionaires in 2021 globally, nearly a third more than the 2,095 in 2020. Largely due to newcomers from China and India, Asia-Pacific had 370 more billionaires, reaching a record 1,149 this year. The combined net worth of Singapore’s 50 most affluent rose 25 per cent to US$208 billion this year from a year ago, according to a report in Forbes Asia in August.

One-fifth of Singapore’s 50 richest are self-made tech tycoons, including the co-founders of e-commerce platform Shopee’s parent company Sea – Forrest Li, Ye Gang and David Chen. Based on a global wealth report by Credit Suisse, Asia-Pacific had 57,318 ultra-high-networth adults (individuals with net worth of US$50 million or more) in 2020, representing slightly over a quarter of the global ultra-high-net-worth adult population.

SINGAPORE is open to foreigners who choose to grow their presence here. Through the Global Investor Programme, there is a path to permanent residency for qualified business owners or families if they invest S$2.5 million in a local business or certain funds or a family office with at least S$200 million in assets.

More affluent families have flocked to Singapore as a base to park their wealth. Data analysis firm Handshakes estimates that 221 single and multi-family offices opened here in 2020, which is up from 129 in 2019, and 22 in 2018.

Singapore is drawing the wealthy with its favourable tax rates, stability, rule of law, ease of doing business, quality education and high standards of healthcare.

Looking ahead, CBRE Research believes that low interest rates and ample liquidity will continue to underpin demand in the luxury residential investment market. Knight Frank Singapore’s head of research Leonard Tay said: “There are early signs that Singapore’s attractiveness to foreign and local wealth is just beginning to translate into increased activity supporting prices, given the stable business and political environment when measured against political tensions in other parts of Asia.”

MR Tay says prices of large luxury homes in prime areas are supported by the current limited inventory and pent-up demand from high net worth foreigners. Should travel restrictions ease, Mr Cha expects more wealthy foreigners to set up shop here. “As foreigners are not eligible to buy landed homes, luxury penthouses in premier locations would offer the lifestyle that befits their status.”

Mr Tay expects landed home prices to rise, led by GCBs. He said: “The GCB market, which came alive after the circuit breaker of 2020, is expected to enter into a period of renaissance in the next 12 months as pandemic- driven entrepreneurship and transformative Covid-19 industries create new wealth and a new class of luxury home buyers.”

Will it be blue skies for luxury homes here, with more record breaking transactions of GCBs, Sentosa sea-front villas and Orchard Road penthouses?

While digitalisation has disrupted many aspects of life, the lure of good homes as places to unwind, recharge, build family bonds and express oneself – as well as valuable assets.