GCB deals and prices expected to rise in 2024 on pent-up demand, motivated sellers

Market starts to stir in December after quietening in the aftermath of the anti-money laundering raids on individuals of Fujian origin

Dec 21, 2023

AFTER a relatively quiet year, the volume of transactions for Good Class Bungalow (GCB) Areas is expected to pick up in 2024.

This is likely to be fuelled by pent-up demand and more realistic price expectations from the segment of owners who are motivated to sell.

Expectations of lower borrowing costs are also likely to help improve the buying mood, said observers.

Generally, agents are projecting prices to be firm, with room for upside, probably later in the year.

Bungalows in the 39 gazetted GCB Areas are the most prestigious form of landed housing in Singapore, with strict planning conditions stipulated to preserve their exclusivity and low-rise character.

New record price in the offing?

Veteran GCB agent KH Tan said he foresees a new benchmark price in terms of per square foot (psf) of land area being set in 2024, exceeding the record S$4,500 psf achieved this year for the trio of Nassim Road bungalows sold by Cuscaden Peak Investments.

Tan, who is managing director of Newsman Realty, told The Business Times (BT) that he will begin marketing in January a brand-new freehold house on a site of about 15,000 sq ft near the Singapore Botanic Gardens. “There’s a high chance it will be sold at substantially above S$4,500 psf,” he added.

Market observers told BT that whether such properties will be sold and benchmarks set will also depend on the profile of their owners.

There are two broad camps of owners/sellers in the GCB market. There are those with no urgency to sell and with strong holding power; they have high asking prices or in some cases, a moving target of successively higher prices. Other sellers, however, may need to find a buyer urgently for their bungalow and are prepared to adjust their price expectation downwards or even go below valuation. It is this second group that will play a key role in driving transaction volumes.

On the demand side, Newsman’s Tan said that for most of 2023, buyers had generally moved to the sidelines and were not making offers as they were waiting, hoping to be able to buy at attractive prices. “However, in the past one month, I have seen many buyers returning to the market, prepared to pay higher prices than what they had offered between July and November this year.”

He attributed the improvement in buying sentiment partly to successful launches in the private condo market, as well as potential GCB buyers becoming impatient from having delayed their purchase decision.

The recent flurry of buying interest has resulted in GCB prices starting to firm again this month after softening between August and November, in the aftermath of the biggest anti-money laundering action by the Singapore authorities on individuals originating from Fujian, China.




Tan is sanguine that momentum in the GCB market is likely to continue next year, especially with the Federal Reserve now expected to make three cuts of 25 basis points each to the federal funds rate in 2024.

Steve Tay, executive director of Steve Tay Real Estate, said the volume of GCB deals will improve in 2024 due to more realistic price expectations from owners who have genuine motivation to sell, for example, elderly empty-nesters. “The buyer pool is still healthy; it’s just that buyers are not prepared to pay a high premium – unless the right property becomes available and they deem the value fair, in terms of land attributes, design of the house and/or rarity of supply, for example, large plots of above 30,000 sq ft.”

List SIR’s executive director, Lewis Cha, highlighted that although activity in the GCB market may increase in the next 12 months with interest rates expected to take a breather, other factors will also be in play, including macroeconomic and geopolitical conditions around the world. “Should any GCBs on large plots of land transact at big absolute price quantum, that could be a catalyst for more deals and also further price gains,” he added.

Realstar Premier founder William Wong, too, predicts that the number of deals will be higher in 2024, citing pent-up demand, with prices likely to be stable for a start. “After there is more certainty in the global economy, prices will start to climb again, likely in the last quarter of 2024, or in 2025,” he said.

There are only around 2,700 bungalows in GCB Areas; there is thus “rarity value” to owning one of these homes. One generally has to be a Singapore citizen to be allowed to buy such a property.

So far this year, there have been 17 transactions totalling S$406.1 million in GCB Areas, based on List Sotheby’s International Realty’s (List SIR) analysis of URA Realis caveats data downloaded on Dec 17; the latest transaction is dated Nov 22.

Market observers estimate that additionally, there have been at least S$700 million of deals in 2023 for which buyers did not lodge caveats. Examples include Cuscaden Peak Investments’ sale of the three Nassim Road properties for a total of S$206.7 million to members of the Fangiono family behind Singapore-listed palm oil producer First Resources. Prior to this transaction, another Fangiono family member picked up one more Nassim Road bungalow for S$88 million earlier this year from another party – this was also not reflected in URA’s caveats data.

Newsman’s Tan said he expects the number of deals in GCB Areas – comprising both caveated and non-caveated transactions – to increase in 2024 over 2023.

The year-to-date tally based on URA Realis caveats data is down sharply from the 44 deals that totalled S$1.2 billion in 2022, which in turn was lower than the 90 deals amounting to a record S$2.6 billion in 2021.

Giving his perspective, Realstar Premier’s Wong said: “Positive sentiment from the stellar year in 2021 spilled over to 2022, with buyers still hoping to secure their GCB for fear of missing out. Sellers, however, were not compromising on their price and this led to the moderation in sales volume in that year.”

In similar vein, Tay of Steve Tay Real Estate said the record land rate fetched around April this year for Cuscaden Peak Investments’ Nassim Road bungalows further raised price expectations among owners across all GCB Areas.

Said Wong: “The buyer-seller price mismatch continued into 2023, and along with uncertainty in the global economy and high interest rates, has caused the transaction volume to drop further.”

Sentiment was also dampened by another round of property cooling measures in April this year and the high-profile anti-money laundering bust in August, he added.

Exuberant GCB rents party busted

As List SIR research director Han Huan Mei noted, some of those arrested were living in GCBs, paying high rentals of well above S$100,000 a month. This pushed up rents in the sector. “With the party having ended, some GCB landlords realised that they have lost a lucrative source of rental income,” she said.

Owners of such properties are now said to be taking a longer time to find replacement tenants due to the stigma associated with the former occupiers, even at more down-to-earth rents.

Wong of Realstar singled out the raids as having the biggest impact on activity in the GCB market this year. “Many buyers chose to hold back, preferring to stay under the radar, even though their profile and intended purchase are legitimate,” he added.

Tay highlighted that while the volume of GCB deals has come down for the second year running, transacted land rates in 2023 are at least 40 per cent higher than 2019-2020 levels.

He also said that this year, he has seen more local ultra-high-net-worth families entering the GCB market, looking for properties to buy for their children to hold for the long term. Young local entrepreneurs who have done well in their businesses are also shopping around in GCB Areas for their dream family home. “I’ve also noticed Malaysians and Indonesians with family members who have become Singapore citizens looking to own a GCB for their own use,” said Tay.

Wong said that compared with 2021 and 2022, there have been fewer China national-turned-Singapore citizen buyers in the market this year.



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