Published 23 April 2011
The Business Times
By Kalpana Rashiwala
Price of Good Class Bungalows holds firm but cooling measures hit sales volumes
SALES of Good Class Bungalows (GCBs) – the creme de la creme of the landed housing market on mainland Singapore – eased in the first quarter of this year, as the January property cooling measures hit even some of the well-heeled buyers in this property segment.
CB Richard Ellis’ analysis of caveats information reveals 16 deals totalling about $338 million in Q1 2011 – down from 30 sales amounting to $623 million in Q4 last year, and 31 transactions worth $516 million in Q1 2010.
Still, the average per square foot price on land area in Q1 2011 showed no sign of weakening. It has instead crept up 3.4 per cent from $1,218 psf in Q4 last year to $1,260 psf.
Year on year, the latest Q1 average price of GCBs transacted jumped nearly 33 per cent.
The GCB transactions in Q1 work out to about 13 per cent of the record 121 deals for the whole of 2010. Their value of $338.5 million is 15 per cent of the $2.27 billion of GCBs that changed hands last year, which was also a fresh high.
Commenting on the latest drop in sales in upscale bungalows, CBRE director (luxury homes) Douglas Wong said: ‘The seller’s stamp duty rates announced in January for those who buy properties and sell them within four years have had an impact on short-term traders in the GCB market. So the volume of sales has dipped as there is less speculative activity, leaving owner-occupiers and long-term investors as the main players.’
Those who buy a private residential property from Jan 14 and sell it within a year, will be slapped with a seller’s stamp duty of 16 per cent of the sale price of the property. The seller’s stamp duty rates are 12 per cent, 8 per cent and 4 per cent if the property is disposed of in the second, third and fourth year respectively of purchase.
Mr Wong suggested that some GCB buyers who have to borrow may also be affected by the lower loan-to-value (LTV) cap of 60 per cent for those with existing housing loans. ‘However, there are still many high networth individuals who can make an all-cash purchase or need to gear just slightly,’ he said. The lower LTV doesn’t bother them.
Explaining why average per square foot prices have held firm despite lower transaction volumes in Q1, Mr Wong said: ‘Sellers are not in a hurry to offload their GCBs as most of them have holding power.
Another reason why they have less incentive to sell now, particularly if they intend to buy a replacement GCB later, is that the new purchase will be subject to the Jan 13 cooling measures. Hence, the effective pool of GCBs for sale is becoming even more limited.
‘As a result, potential GCB buyers have even less choice – and those wishing to acquire a property for their own occupation or long-term investment may choose to pay a higher price.’
GCB deals in March this year include a $38.8 million transaction (about $1,618 psf on land area of 23,982 sq ft) at Tanglin Hill and a property at Cornwall Gardens which fetched $23.5 million or $1,496 psf on land area of 15,705 sq ft.
The buyer of the Tanglin Hill property is believed to be Luo Qian Qian, a non-executive director of Nasdaq-listed, Shanghai-based Shanda Interactive Entertainment Limited. According to Shanda’s 2009 annual report, Ms Luo is married to Shanda chairman and chief executive officer Chen Tianqiao. She is understood to be a Singapore citizen.
The Cornwall Gardens bungalow is said to have been bought by Dorothy Ng, daughter of the late property tycoon Ng Teng Fong. She is understood to have purchased the property jointly with her son.
Newsman Realty managing director KH Tan predicts that while the number of GCB transactions for the whole of 2011 is likely to ease from last year’s high, GCB prices are likely to increase by 10-15 per cent for the whole of this year.
‘Sellers’ price expectations are higher – and there is less GCB stock available for sale, while the ultra-rich shopping for GCBs are still flush with a lot of money,’ he said.
Among those actively looking for GCBs now are ‘local Singaporeans, new Singapore citizens, particularly those hailing from China and Indonesia, as well as some Singaporeans based in Hong Kong who are now returning home’.