Thursday, June 18, 2009

Top-end bungalows going, going, gone

7 good class bungalows sold in April and May, more deals in the works

(SINGAPORE) The most prestigious segment of Singapore's residential property sector has picked up over the past two months.

Seven good class bungalows (GCBs) were sold in April and May - up from just two transactions in Q1 2009 - according to Savills Singapore's analysis of caveats captured by URA Realis.

The numbers are for bungalows with the minimum plot size of 1,400 square metres (about 15,069 square feet) stipulated for GCBs in the 39 GCB areas (GCBAs) here gazetted by the Urban Redevelopment Authority (URA). However, if bungalows with land areas below 1,400 sq m are also included, the April-May period saw 10 caveats - again significantly higher than the three caveats lodged in Q1.

'The higher GCB sales in April and May reflect the general improvement in investment sentiment on the back of the stockmarket rally. Some GCB buyers could also be savvy investors who made money in the stock market. Going ahead, they may feel that there's more upside than downside for GCB prices,' says Savills' director for prestige homes Steven Ming.

The biggest GCB transaction in May (and also so far this year) was the $30 million sale of 2A Ridley Park, which has 27,233 sq ft land area. The price works out to $1,101 per square foot (psf) of land area - also the highest on a unit land price basis in 2009.

At least one other transaction has been done at above $1,000 psf recently, although it has yet to be reflected in caveats: 1 Cluny Hill, which was sold for $16.2 million or $1,081 psf based on its 14,985 sq ft plot size. Forbes Property Realty Network brokered the deal.

Douglas Wong, director, luxury homes at CB Richard Ellis, notes that GCB investors in Singapore often own two or more such properties - one for their own residence and the rest for investment.
'With the recent increase in activity, they may consider it opportune to liquidate some of their GCB holdings and get some cash back to plough into other investments or their business,' he said.

Compared with just three GCB transactions in Q1, Mr Wong expects some 14-17 deals in Q2. 'Assuming the stock market is able to hold up till the end of 2009, we estimate that some 38-45 GCBs could be sold for the whole of 2009, amounting to a total quantum of some $700-800 million,' he added. This would not be far off from the $827 million from the sale of 51 GCBs last year.

Other notable GCB transactions in May include a property at Jervois Road that sold for $13 million ($862 psf), and another bungalow at Binjai Rise that was sold for $19.8 million ($871 psf) to international action star Jet Li.

The highest ever psf price attained for a bungalow in a GCB area is $1,899 psf for 32H Nassim Road in October 2007. But the area of that plot is 13,423 sq ft, less than the minimum GCB plot size. That's why the GCB benchmark is generally considered $1,308 psf - the price obtained for 15 White House Park, with 22,012 sq ft land area, in August 2007.

Activity in the landed housing market first started picking up this time around in the 'low-end' segment - meaning terraced and semi-detached houses - about three months ago, said Michael French, MD of Asia Premier Property Consultants.

'We have not seen such buying levels in the market for a long time,' he said.

The activity then filtered up to smaller bungalows of about 4,000-8,000 sq ft. Then, about four weeks ago, demand for GCBs took off, with several large deals being concluded in May.

More big GCB deals are on the cards. BreadTalk founder and chairman George Quek is looking to sell his 2 Swettenham Road GCB and the price tag could be as high as $33 million, or $991 psf. Mr Quek bought the property, with 33,293 sq ft land area, with his wife last year for $27 million or $811 psf. He has appointed Newsman Realty to handle the sale, and the firm's managing director, KH Tan, hopes to get $33 million for the 1960s bungalow.

The property will be sold through a closed tender on June 30. Mr Tan has pre-selected 30 prospective buyers whom he intends to invite to view the property and to participate in the bidding exercise. Part of the proceeds from the sale will be donated to charity.

Source: Business Times, 18 June 2009

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