Sunday, June 21, 2009

Top-end bungalow prices rise as sales revive

Action star Jet Li, who recently bought a good class bungalow (GCB) in Binjai Rise for $19.8 million, will have new neighbours as the market for GCBs continues to pick up over the next few months.

Property agents say they are expecting to close more deals.

'I expect to sell six to eight out of the 15 good class bungalows on hand within six months,' said Mr K.H.Tan, managing director of property firm Newsman Realty.

ERA property agent George Lee is singing the same tune. He expects to sell two GCBs in the next two months, while negotiations for a couple of deals are under way for Mr Steven Ming, Savills' director for prestige homes.

It was, however, a different story at the start of the year, after the fall of Lehman Brothers which crippled the world economy late last year.

Total residential investment sales, including GCBs, plunged by 60.7 per cent in the first quarter of this year from the last quarter of last year.

Mr Lee had no GCB sales at the start of the year.

According to Savills Singapore's analysis of caveats captured by the Urban Redevelopment Authority (URA) Realis system, there were only two transactions in the first quarter of this year, a figure which picked up to seven transactions in April and last month.

Home to high-profile businessmen and now, at least one international celebrity, GCBs are high-end bungalows worth at least $10 million that sit on a minimum plot size of 15,069 sq ft. There are about 2,400 GCBs in the 39 areas gazetted by the URA.

Popular GCB addresses include Nassim, Cluny, Bishopsgate and White House Park estates.

While the restrictions for Singaporeans to own GCBs are only the size of their pockets, applications by permanent residents (PRs) to buy these houses are assessed on a case-by-case basis, depending on their contribution to Singapore.

Owners are allowed to build only up to two storeys.

Foreigners are not allowed to own GCBs.

As a sign of recovery, the average price per sq ft (psf) for GCBs has increased by 10 per cent to 15 per cent in the last month, said Mr Tan of Newsman Realty.

In January, it cost $800 to $1,000 psf for a new house in District 10. Now, it has risen to between $1,000 and $1,200 psf, said the agent who is handling the sale of 2, Swettenham Road, which belongs to Mr George Quek, founder and chairman of bakery chain BreadTalk.

'Buyers find GCBs a safer form of investment than putting money in a bank. The return of 2 per cent is higher than the bank's 1 per cent,' said Mr Tan.

An influx of rich foreigners who eventually settle down here will also drive up the demand for GCBs.

'With more and more rich foreigners becoming citizens and PRs, the demand for GCBs is expected to drive prices up by 30 per cent in the next three years,' Mr Tan added.

To yield a good investment, buyers tend to look out for GCBs that are situated in the prime districts of 9, 10, 11 and 21, on elevated land, have a wide frontage and a 360-degree unblocked view.

Despite the market recovery and assurance of high returns, one GCB resident will not be selling her house any time soon.

Ms Werny Drahma, 32, loves her 18,000 sq ft Leedon Park house which she shares with her parents, three siblings, her husband, their two children and four maids. Her father is the chairman of commodity trading firm Wilson Global Trade.

'I love that I can have my personal space,' said the Indonesian- born ethnic Chinese, who is now a Singapore citizen.

The house was registered under Ms Drahma's name in 2002. Back then, it cost her parents less than $10 million, and she estimates that the value has appreciated by about 50 per cent.

The upkeep of the house - including electricity bill and maintenance for swimming pool, koi pond, aquarium and garden - comes to several thousand dollars a month.

The Drahmas' sprawling home is the result of her father's hard struggles, she said.

'My father came from a small town in Indonesia and was very poor. He had only high school education. But by perseverance, he managed to make it big by his 30s,' said Ms Drahma.

Source: Sunday Times, 21 June 2009

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