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City&Country: Offshore-- Bungalow prices continue uptrend

The segment of the property market in Singapore that seems to be immune to the government measures announced on Feb 19 relating to stamp duties and loan-to-value (LTV) limit appears to be landed housing, which was the best-performing residential sector last year.

“I’m very confident the government measures will have very little impact on the landed home market,” says William Wong, managing director of RealStar Premier Property Consultants, a landed-housing specialist in the prime residential districts of 9, 10, 11 and 15. “In the next couple of months, you may see a bit of a slowdown in terms of transactions, but I don’t see prices coming down. In fact, landed home prices will probably appreciate another 5% to 10% by year-end.”

K H Tan, managing director of Newsman Realty, who specialises in the Good Class Bungalow (GCB) segment, agrees. “I’ve checked with all my clients, and they think the measures won’t affect them at all,” he says. Given buyers’ relentless optimism, the GCB market will continue to remain buoyant, says Tan who expects to see “a couple of record deals” this year.

“Most transactions should be hitting new highs this year,” he adds. “There is a lot of money sitting idle in the banks and, with interest rates so low, most people are looking to put their money into real estate, as they feel it’s safer than putting it in some financial product.”

GCBs commanding high premiums
In January, Tan was given the exclusive right to handle the marketing of 4 Swettenham Road, a GCB on a freehold hilltop site with a total land area of 29,569 sq ft. “I sold it that same day,” he says. The property went for S$31.5 million or S$1,066  (about RM2,563) psf, according to a Jan 25 caveat lodged with URA Realis. Last July, Simon Cheong, chairman and CEO of SC Global Developments, is said to have purchased the neighbouring 2 Swettenham Road, a similar hilltop bungalow with a slightly larger land area of 33,293 sq ft, for S$29.2 million or S$877 psf.

Meanwhile, 8 Swettenham Road, with a land area of 15,145 sq ft, was sold for S$17 million or S$1,122 psf, according to a Feb 1 caveat. According to sources, the previous owner was Raymond Ng, executive chairman of Enviro-Hub Holdings, who also established private property group BS Capital in 2003 that started by purchasing a sprawling 276,112 sq ft GCB freehold site at Bishopsgate from HSBC for S$69.8 million. The site was subsequently sub-divided into 16 plots and sold off. BS Capital is also the developer of The Arc at Draycott on Draycott Road and The Lumiere on Mistri Road in the CBD.

Ng is said to have purchased 8 Swettenham Road in August 2004 for S$4.64 million (S$306 psf), according to a URA Realis caveat, at a time when the property market was still in the doldrums. He has since torn down the old house and built a contemporary tropical home. Based on his sale price, the GCB enjoyed a capital appreciation of 266% in less than six years.

More buyers entering market
After a short lull during the Chinese New Year holidays, Newsman’s Tan says there has been a tremendous pick-up in the number of inquiries in the GCB market, predominantly from Singaporeans, but also from mainland Chinese-turned-Singapore citizens and Singapore permanent residents. “There are a lot more buyers entering the market, both as owner-occupiers and investors,” he says. “They are very optimistic about the two IRs [integrated resorts]. They are of the opinion that prices at this end of the market have room to go up another 10% to 20%.”

The government measures have minimal impact on the landed home segment due to the scarcity of landed housing sites — unlike condominium sites, which are expandable through en-bloc sales, and also government land sites, explains RealStar’s Wong. Unlike condos, where one can flip a property within a few short months, most bungalow buyers — be it owner occupiers or investors — will want to make some additions and alterations to the property, especially if it’s an existing property, before moving in or renting it out. This will take six months to a year, estimates Wong. Hence, the introduction of a seller’s stamp duty of 3% on all residential properties and land purchased from Feb 20 and sold within one year will have negligible impact on landed home buyers, he argues.

“While there were a few buyers who flipped their bungalows last year, it wasn’t as rampant as what we saw in 2007 and early 2008,” notes Wong. The other measure of lowering the LTV limit from 90% to 80% for all housing loans also has little effect on such high-net-worth individuals looking for these high-end properties. In the GCB segment, even the smallest unit with a land area of 15,070 sq ft has an asking price of S$17 million to S$18 million today, he says.

No backing down on asking prices
Owners are also not backing down from their asking prices. For instance, the person who purchased No 3 Leedon Park, a GCB with a land area of 41,850 sq ft, for S$40 million (S$956 psf) last September recently put the property on the market. According to Newsman’s Tan, who is currently marketing the property and conducting an open house, the asking price is S$60 million or S$1,434 psf. “We have received some offers, but we don’t want to disclose [them] yet,” he says.

“The owner feels that such a big GCB site is a rare gem today, as most of the large GCB plots have already been sub-divided into smaller sites,” says a marketing agent who declined to be named. “Hence, he’s placing a premium on the pricing.” According to market sources, the owner, a Singaporean businessman, is one of the most active players in the bungalow segment in recent years.

Another owner sitting on a 30,000 sq ft freehold site in the coveted Nassim Road neighbourhood has recently received an offer of S$1,800 psf for the property. But, it was turned down. “We’re still negotiating,” says Tan. “It’s Nassim Road, and it’s a huge site, so the owner believes it commands a premium.”

Meanwhile, a newly completed GCB at 5 Belmont Road, with a freehold land area of 16,327 sq ft and built-up area of 7,200 sq ft, was put up for sale by auction through Knight Frank on Jan 28. The indicative price was in the S$16 million to S$18 million range. The bids fell short of the owner’s asking price and the property was subsequently withdrawn from the auction market. Today, it is on the market via private treaty, with an S$18 million price tag, says RealStar’s Wong, who is marketing the property.

Sentosa Cove market sizzling
The bungalow market in Sentosa Cove is also sizzling, especially with the opening of Resorts World at Sentosa. A newly completed bungalow sitting on a 99-year leasehold land site with an area of 7,007 sq ft at 38 Cove Way was sold for S$12.5 million or S$1,783 psf, according to a URA Realis caveat lodged on Feb 5.

The neighbouring 36 Cove Way, sitting on a 6,781 sq ft site and featuring a new bungalow designed by architect Robert Greg Shand that is close to completion was, according to market sources, recently sold for S$2,000 psf. The caveat has yet to be lodged.

The bungalow, which faces the waterway, last changed hands for S$9 million (S$1,326 psf) just six months earlier, according to a URA Realis caveat lodged last August. The transactions at 36 and 38 Cove Way were said to have been brokered by Newsman.

Cecilia Chow is City and Country editor at The Edge Singapore

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 796, Mar 8 - 14, 2010

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