Singapore: Why Good Class Bungalow prices, transactions will continue to soar

SINGAPORE (March 19): In the first 2½ months of 2021, Realstar Premier Group brokered the sale of five detached houses — including three Good Class Bungalows (GCBs) — and a corner semi-detached house at One Tree Hill estate. The six deals fetched a sales value of S$137.63 million (RM422.86 million)

Last year, the firm brokered about S$1 billion landed property transactions — from terraced houses to GCBs. It was a record year for the firm in its 21-year history. While it is good for business, William Wong, founder and managing director of Realstar, reckons GCB prices could soon soar beyond the reach of “true-blue Singaporeans” who aspire to own one.

The escalation in prices — both in absolute and psf terms — of GCBs is due to newly minted citizens jostling for a foothold in this most prestigious of houses in Singapore, he says. “A few years ago, these were mainly Chinese nationals-turned-Singapore citizens,” he says. “While the Chinese still make up a sizeable percentage today, we also have new citizens from Hong Kong, Taiwan, India, Pakistan, and many other nationalities from across the world.”

The ultra-rich are attracted to Singapore by the government’s Global Investor Programme (GIP), reckons Wong. First rolled out in 2004, it was updated in March 2020. Under the new scheme, next-generation business owners and founders of fast-growing companies from overseas will be granted permanent residence (PR) status for those who are eligible. Family offices are eligible to apply for PR status under this scheme too.

Founders of fast-growing start-ups must be one of the single largest shareholders, and the company must be worth at least S$500 million. Family office principals must have net investible assets of at least $200 million, including bank deposits and collective investment schemes.

“We have begun to see some of the ultra-high-net-worth foreigners moving their business to Singapore under this fast-track PR scheme,” notes Wong. “I believe demand for GCBs will be very strong over the next two years, based on the profile of these individuals.”

Debut of the ultra-rich

Last month, it was reported that Sergey Brin, Google co-founder and the eighth richest person in the world with a net worth of US$88.4 billion (S$119 billion), according to Forbes, is setting up a branch of his Bayshore Global Asset Management family office in Singapore. In November, Ray Dalio, billionaire founder of hedge fund Bridgewater Associates, announced that he is also opening a family office in Singapore.

Others who have moved their base to Singapore include James Dyson, UK’s richest and inventor of the bagless vacuum cleaner, bladeless fan and supersonic hair dryer among others. Dyson paid S$50 million (S$3,311 psf) for a GCB at Cluny Road located near the Singapore Botanic Gardens. Facebook co-founder Eduardo Saverin moved to Singapore in 2009, and is now a citizen. A trust linked to Saverin is said to have purchased a GCB on Nassim Road for S$230 million in 2019. American investor, former fund manager and financial commentator Jim Rogers moved to Singapore with his family in 2007.

According to Wong, a lot of GCBs have been rented out at very high rates. “Some of these ultra-rich may not be eligible to purchase a GCB yet,” he says. “So they are renting a GCB while waiting for their citizenship. For some, if they really like the GCB, they are willing to pay over S$100,000 a month to rent it.”

Realstar is in the midst of brokering such a deal between a tenant and a GCB owner. The tenant will rent the GCB at a pre-agreed rate from the owner. Should the tenant obtain Singapore citizenship, the GCB owner will have to sell the property at a pre-agreed price. It typically takes between six and 12 months to obtain Singapore citizenship, notes Wong.

Outsized deals

At the start of the year, a detached house on Chatsworth Avenue, just off Tanglin Road in prime District 10, was sold for S$27.38 million or a high of S$2,938 psf in January this year. The detached house sits on a land area of 9,319 sq ft, which is smaller than a GCB, where the minimum land area is 15,070 sq ft. Roy Teo, founder of The Mill Group of design companies, was the former owner of the home at Chatsworth Avenue, and had also designed the house. Even though the land is smaller than a GCB, it was still able to command GCB prices, says Wong. He attributes it to the design of the house.

Realstar is said to have brokered the sale of the detached house at Chatsworth Avenue. It also brokered the sale of a semi-detached house designed as a link bungalow at One Tree Hill estate in prime District 10. The newly completed house at Lengkok Merak sits on a land area of just 4,672 sq ft. But it has a double frontage, and the house has a built-up area of 10,000 sq ft, with five en suite bedrooms, a swimming pool and all the trappings of a GCB, from V-Zug kitchen appliances and Axor Citterio kitchen faucets to Italian brand Gessi and German brand Dornbracht for the bathroom fittings and sanitaryware.

The house at Lengkok Merak fetched S$15.8 million (S$3,382 psf), according to a caveat lodged with URA Realis at the end of January. It is a record price in absolute terms for a semi-detached house in the One Tree Hill area. It is also one of the highest psf prices in the neighbourhood, based on URA data. “Prices are quite erratic,” concedes Wong. “You can’t tell how much a buyer is prepared to pay.”

Transaction volume in 2021 to surpass that of 2020

Given the level of activity in the first three months of 2021, Wong expects the transaction volume for GCBs to surpass that of 2020. Realstar is said to have 40% of the market share of GCB transactions last year.

“I believe 70% is due to improving market sentiment,” says Wong. “The remaining 30% is due to the company consciously trying to digitise our operations last year.”

It is not just GCBs in the prime districts that are seeing strong demand, but detached and semi-detached houses in the prime districts of 9, 10 and 11, as well as in the Katong area in District 15 in the east. “Even a small detached house sitting on a land area of 4,000 to 5,000 sq ft is priced above S$10 million in the Branksome Road and Goodman Road area off Mountbatten Road,” he says.

Realstar is marketing a detached house on Branksome Road on an exclusive basis. The 2½-storey detached house sits on a land area of 6,532 sq ft and has a built-up area of 7,500 sq ft. It has six rooms, a pool, and wet and dry kitchen. The house is on the market with a price tag of S$13.2 million (S$2,021 psf).

Wong expects transaction prices of landed homes to increase by 5% to 7% this year, and GCBs to see an even greater increase of at least 10%. This is because the pool of GCB buyers has enlarged, given the higher number of new citizens turned buyers, he notes. “Their perspective is very different from that of local Singaporeans,” observes Wong. “They are looking at Singapore through a different lens and comparing it with prices in other global cities.”

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