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It's all about the class
GOOD Class Bungalows (GCBs) are an extremely rare asset associated with status and highly coveted among high net worth individuals. Located in exclusive enclaves mostly within the prime Districts of 10 and 11, there are just about 2,800 bungalows available across 39 designated areas in Singapore.
Its prized status is further cemented by its high quantum typically exceeding S$20 million, making them true trophy assets exclusive to individuals of the highest income percentile in Singapore. The minimum plot size of a GCB is 1,400 sqm, as defined by the Urban Redevelopment Authority (URA).
Due to its scarcity and coveted status, average prices of GCBs have trended upwards over time, despite pressure from the boom and bust private housing price cycle. While the number of GCBs sold has subsided from its historic highs from 2009 to 2010, transaction numbers have remained stable, even after the Total Debt Servicing Ratio was implemented in the second quarter of 2013. Owners of GCBs have deeper pockets that allow them to hold out during down cycles, and they are largely unwilling to sell their properties at a loss.
Nevertheless, well-heeled buyers continue to pay high prices despite market uncertainties, with 10 GCBs out of 18 in GCB areas exchanging hands in 2018.
Since the beginning of the year, GCB areas Chatsworth Park and Cluny Hill have recorded the highest transactions thus far, with the former having the highest sales volume (Exhibit 1).
Located in prime District 10, both areas are close to Unesco World Heritage Site, the Singapore Botanic Garden, as well as the premier Orchard Road shopping belt.
Additionally, overall transactions for GCBs year-to-date lists 3 Jervois Hill going for the highest unit price of S$2,729.52 per sq ft of land area, while the highest quantum transacted was for 35 Leedon Road, at S$57.5 million (Exhibit 2). Both properties are also situated in District 10.
With the uniqueness of each land parcel and the corresponding GCB residing on its plot, many owners have also added to its distinctiveness by investing heavily in the architecture and design of their homes. To extract greater value from older GCBs which may be dated and less well-maintained, investors often rebuild or refurbish existing homes.
Moving forward, interest in GCBs is likely to grow, with demand emanating both from existing ultra-wealthy individuals living in GCB areas and the newly rich.
Linda Chern, director and head of Prime Sales and Corporate Leasing at Knight Frank Singapore elaborates: "With the rapid growth of the Internet of Things, a new generation of high net worth individuals will emerge, potentially expanding the buyer pool and thereby, demand. As these individuals are likely to be attracted to GCBs for their famed attributes such as proximity to nature, the city, as well as the associated status with owning an exceptional piece of property, demand for GCBs is likely to be stronger in future, and prices will similarly grow, and at a faster pace." W