The transactions of Singapore’s most expensive properties – The Good Class Bungalow (GCB) market — plummeted in 2022 with 43 transactions completed at a total sale worth of $1.157 billion during the first eleven months. This represents an increase of 55% decrease in GCBs from 90 which were sold for a total in the amount of $2.57 billion by 2021.
“Concerns regarding the growing cost of borrowing, higher inflation and a possible recession caused some investors delay buying until the forecasts for rates in the global market become more clear,” says Han Huan Mei director of research at Listing Sotheby’s International Realty.
GCB sales are expected to slow in 2023. “The volume of transactions next year will not be as hot as the 2021 year,” says GCB expert and director at Newsman Realty, KH Tan. “It’s likely to be comparable to the one we had this year.”
The significant rises in the prices of bungalows in the last three years have been the reason the constant increase in expectations for prices, according property experts. The most significant round of adjustments was the result of the sale of 32,160 sq ft of freehold site located in the sought-after Nassim Road region that was worth $218.8 million ($4,005 per square foot). The transaction was completed in March 2021. it was among the most costly GCB this year in absolute dollars.
The purchaser is Jin Xiao Qun, wife of the chairman of the board and the founder of Nanofilm Technologies International, Dr Shi Xu. the seller’s name is Sukmawati Widjaja, also known as Oei Siu Hoa’s family, which owns Sinar Mas Group. Indonesian multinational conglomerate Sinar Mas Group.
A wave of repricing of assets
At $4,005 per square foot The Nassim Road property held the title of the most expensive GCB in terms of psf for only a few months before transferring it to the GCB located at Cluny Hill, bought for $4,291 psf April 2021. Buyer was Tommy Ong, founder of Shopify review site Stamped.io who purchased $63.7 million to purchase the GCB for a 14,844 sq feet freehold site when the house was in construction. Seller Sebestian Soh who is the founder of and executive director at the development advisory firm Meir Homes, would be finishing the house in order to sell it. It is believed that the Cluny Hill GCB was his first property. Meir Homes will be launching another GCB property by 2023.
In the Nassim and Cluny regions were the epicenters of these record-breaking deals . They caused a tsunami of repricing for assets that resonated throughout the GCB market. “Prices have reached a new level in 2021 and we will not witness GCB values drop below these values,” says Steve Tay who is senior associate vice-president at List Sotheby’s International Realty.
Newspaper Realty’s Tan estimates that the prices of GCBs located in close proximity to Singapore Botanic Gardens. Singapore Botanic Gardens, such as Nassim and Cluny regions, are between $4,500 and $4,800 per sq ft range. While the prices for most GCB areas are expected to stabilize however, he anticipates costs within areas like the Nassim and Cluny region to “continue to rise”.
The asking prices definitely aren’t the only thing to consider. In the last week of the month of September, three GBCs on Nassim Road were launched for auction through Cuscaden Peak Investments. The GCBs are located on land sizes that range from 15,131 sq feet to 15,542 square feet, with prices ranging of $78.68 millions to $80.82 million, which is an average of $5,200 per square foot. Three bids were submitted however RealStar Premier, the exclusive marketing agency had no authority to reveal what the bids were in light of an “non-disclosure arrangement”.
“If all three GCBs located at Nassim Road cross the $5,000 PSF threshold, they’ll establish a new benchmark.” according to Newsman’s Tan.
The most expensive GCBs of 2022
The highest-priced GCB in absolute value was one-story prewar bungalow on Chancery Lane sitting on a 34,216 square feet freehold site located in District 11’s prime area. The GCB was worth $66.06 million ($1,931 per square foot) as per an agreement filed on the 3rd of March. This is the top PSF price in the area.
Buyer came from Kelsey Cheng Tan, wife of Kester Tan the youngest son of Filipino billionaire and chairman of the Alliance Global Group, Andrew Tan. Brothers Mirza Mohamed Mehdi Namazie and Mirza Iskandar Namazie, grandsons of M.A. Namazie an affluent Persian merchant who arrived in Singapore around 1909.
The GCB which scored the highest psf rate this year is White House Park. The park was sold during August, for $45.5 million, which is $3,017 psf. It was purchased by Fu Wei, founder and CEO of CBC Group, a healthcare-dedicated asset management company.
This year was the GCB that recorded the lowest price per sq ft came from a property of 25,272 square feet, freehold property located on Lornie Road that changed hands for $24.8 million ($981 per square foot) during January. This was the sole GCB transaction in the year that was below the $1,000 mark for per sq ft. Buyer was James Koh, executive chairman and co-founder of Fragrance Group.
Although the volume of transactions in 2022 is only half of last year’s, average prices for GCBs sold have risen 11.6% to $1,889 psf from $1,692 per SF last year According the List Sotheby’s Han. She anticipates GCB prices to stay the same or fall slightly in 2023.
The 5% increase in additional buyer’s stamp tax (ABSD) to Singaporeans purchasing their second and following property by the end of December in 2021 caused buyers to put aside an additional cash investment to purchase their property, Han says. “Concerns regarding the cost of borrowing, the rise in inflation, and the prospect of a recession led some to put off purchases until the potential of rate hikes across the globe are clearer.”
New buyers pool
The economic outlook for the macro economy continues to dim, Singapore stands out as “a secure financial hub with clear and business-friendly legislation and a secure environment for its citizens” According to List Sotheby’s Tay notes. This is evident in the record amount of family offices in Singapore that has seen nearly 900 family offices established in 2022 as of now, despite the stricter regulations set by Singapore’s Monetary Authority of Singapore, as well as the growth of assets under management as well as the hiring local executives He also notes.
Tay observes that many people are choosing an option called the Global Investor Programme (GIP) that allows applicants who are successful the opportunity to obtain Singapore permanent Residence (PR) designation. “A number of PRs have successfully sought to become Singapore citizenship,” he says. “Those who are successful in receiving Singapore citizenship are likely to want to have a house that reflects their status and needs as a family such as the GBC.”
The demand for GCBs in 2023 will be encouraged by this emerging buyer pool “alongside locals, particularly younger generations with newly accrued wealth, who see GCBs as the ultimate form of homes that are landed and the status symbol, along with huge living spaces that meet family’s demands” Tay adds. Tay.
Ultra-high net worth (UHNWI) families making their home in Singapore originate mostly from US, Europe and Asia According to Newsman’s Tan. However, those who are who are in this GCB market are mostly originated from China, India and Indonesia Tan adds.
Therefore, as per List Sotheby’s, GCBs that are “priced according to fair market value” that are based on property location and land attributes are sought-after by prospective buyers. “Most of the sales that were made this year were ones in which the seller was willing to reduce their expectations of price to accommodate the demands of buyers.”
The Newsman’s Tan is in agreement. “Last year, people would pay premium rates for an GCB,” he says. “This year, they’re more prudent.”
Move to detached houses
There are more than 2,700 GCBs across 39 gazetted areas in Singapore today. They represent only 25% from the 10761 detached homes in Singapore Based on URA data from 3Q2022.
While transaction volumes on the GCB market is likely to decrease until 2023 William Wong, managing director of RealStar Premier sees activity in the detached house segment extending to be steady.
“The primary reason for the slow trades in the GCB market lies in the larger price difference between buyers and sellers today,” says Wong. He estimates that the gap will be somewhere in the five% or 10% range.
GCB rates have increased in such a rapid manner over the last three years that many who were able to find GCBs not affordable have shifted to detached homes with 8,000 sq feet to 12,000 sq ft of land space instead, according to Wong. This is why the overall cost of detached homes have increased by around 15% over the entire period of 2022.
Wong predicts that detached homes located in the districts of the prime Districts 9,10, and 11 may cross the threshold of $4,000 per square foot and houses located in the Katong district in District 15 could hit $3,500 psf.
“The detached home segment appears to be more appealing than the other housing segments on land -for instance, GCBs semi-detached homes, detached houses and terraced houses” claims Wong. “GCB transactions have slowed due to mismatching prices however, purchasers in the semi-detached or terraced houses are impacted by higher prices of interest and borrowing since they are likely to use more leverage to finance their house purchase.”
Detached home prices have also risen to new heights. In April of this year the developer offered a brand new detached home on a 4,370 square foot freehold site on Camborne Road for $15 million ($3,433 per square foot). The record was set for a brand new detached house located in the Dunearn Estate in prime District 11. The report by Wong.
Additionally, in the Raffles Park neighborhood, RealStar Premier brokered the sale of a detached home located at Oriole Crescent for $23.5 million, as per the caveat that was filed in August. The house is situated on an undeveloped freehold site with a total area of 10,540 square feet and the land value of $2,203 per sq ft is a new mark to be set for the Raffles Park neighborhood in the most sought-after District 11.
Two detached homes in the nearby Cassia Drive changed owners for $22 million in the year. One of them was a beautifully renovated detached home that was situated on freehold site that was 9,973 square feet and sold for $2,206 per sq ft in January. The second is on an unfreehold site that covers 10,625 square feet and sold for $2,071 per square foot in April of this year. Both were sold at lower rates for land compared to the detached home at Oriole Crescent.
Concerning what is known about the GCB markets, Wong expects sales in 1H2023 to slow, but will pick up momentum in the 2H2023. Although the overall GCB transactions could drop by 20% throughout the year, the market is expected to remain relatively steady, “perhaps even see a slight appreciation by 2% up to%” in the coming year, he states.