PROPERTY INSIGHTS

Big money moves in Singapore’s bungalow market

Michelle Low

Published Tue, Oct 15, 2024 · 12:30 PM

Despite the tough resale and rental restrictions imposed, those applying for BTO flats have good reasons to embrace Plus and Prime flats, writes BT senior correspondent Leslie Yee. BT SCREENSHOT

This week in Property

A Nassim Road property is up for sale at a megabucks price
Why Prime and Plus BTO flats are a good buy despite the tight restrictions
HDB’s new Build-To-Order batch
Deals done in the last week

A big ask

A freehold conservation bungalow with perhaps Singapore’s most elite address, Nassim Road, is on the market again. The S$308 million price tag this time, if met, would make it the biggest deal ever to be done in a Good Class Bungalow (GCB) area. Reeling from the sticker shock? Bear in mind how we seem to be seeing more sales surfacing at the top of the private property market. While recent deals may not be struck at record prices, the increasing interest is palpable.

The Nassim property stands on a large tract of land that combines three land lots for a total site area of almost 59,000 square feet. Owned by Hong Fok Corporation joint chief executive Cheong Pin Chuan and his wife, it was put up for sale in 2019 for S$175 million.

The higher asking price this time round values the site at about S$5,240 per sq ft (psf). The Cheongs’ property is diagonally opposite a bungalow on an even larger site (84,543 sq ft), which Wing Tai chairman Cheng Wai Keung and his wife sold for S$230 million in 2019.

The house is also next to three bungalows sold last year by Cuscaden Peak Investments, for a total of S$206.7 million or S$4,500 psf on land area. The properties were sold individually, to Singaporean members of the Fangiono family behind Singapore-listed palm oil producer First Resources. More details on the big money moves in Singapore’s GCB market in Kalpana Rashiwala’s story.

Affordability versus wealth creation

The HDB’s new framework for build-to-order (BTO) flats kicks in with the batch of new flats being launched this week. Close to 9,000 flats will be offered in 15 projects. The flats will come up in Ang Mo Kio, Bedok, Bukit Batok, Jurong West, Geylang, Kallang/Whampoa, Pasir Ris, Sengkang and Woodlands. Now classified as Standard, Plus or Prime based on location, the new model marks a shift away from the mature/non-mature estate dichotomy.

Buyers of Prime and Plus flats, where higher prices reflect their superior locations, will receive more subsidies. But they will also be subject to larger subsidy clawbacks as well as strict resale and rental curbs to keep them affordable. “These restrictions reinforce owner-occupation in public housing, reduce the investment value of a BTO flat and thereby limit speculative gains, or the ‘lottery effect’,” Minister for National Development Desmond Lee said. Samuel Oh reports on the new BTO batch and spells out what the new framework means for buyers.

As Leslie Yee points out, the road to wealth for many Singaporeans starts with a BTO flat. Will this proven wealth creation method still work if one buys a Prime or Plus flat? In The Level Ground, Leslie argues that despite the tough resale and rental restrictions imposed, those applying for BTO flats have good reasons to embrace Plus and Prime flats.

The income ceiling enforced on resale buyers of Plus and Prime flats may not necessarily constrain the prices that these flats, in coveted locations, might fetch on resale. And there may be no lack of demand for such flats, where pricing will be competitive compared to resale units at other hot estates. Further, the longer 10-year minimum occupation period means that those looking to upgrade will be making the switch when they have built up substantial savings through career progression and are entering their peak earning years.

Deal activity

Are more Singapore players looking Down Under for investment deals? Two major Australian office deals were announced recently. Singapore Land and UOL Group confirmed they would buy a 50 per cent stake in 388 George Street, a freehold Grade A commercial building in Sydney’s central business district for A$460 million (S$404.7 million). The acquisition is in line with plans to diversify and strengthen their income streams while expanding their presence in Australia, they said.

Also in Sydney, Metro acquired a freehold prime office property for A$196.4 million. The purchase, which the company described as opportunistic, was done with Metro’s joint venture partner Sim Lian and brings the partners’ holdings in Australia to 18 freehold properties. The portfolio includes five office buildings and 13 retail centres and has a total appraised value of around A$1.4 billion, Metro said.

In Singapore, CapitaLand Ascendas Reit divested an industrial property at 21 Jalan Buroh for S$112.8 million, nearly double the 2006 purchase price of S$58.4 million. The sale was at a premium of S$45.3 million – or 67.1 per cent – over the average of two independent market valuations at S$67.5 million as at Jul 1, 2024.

Sister company CapitaLand Ascott Trust (Clas) sold a Japanese hospitality asset - Citadines Karasuma-Gojo Kyoto - for about 6.2 billion yen (S$53.1 million). The sale price is 40 per cent above the 124-unit serviced residence’s book value as at end-2023, and represents an exit yield of about 0.3 per cent, Clas said. The Kyoto asset would be the third Citadines property that Clas is divesting so far this year. In February, it sold Citadines Mount Sophia Singapore for S$148 million, at almost 20 per cent over book value and at an exit yield of 3.2 per cent. Clas is also in the process of selling another Singapore property, Citadines Raffles Place, to Blackrock and YTL for about S$290 million.

Fund manager GLP Capital Partners (GCP) is selling its operations outside China to US-based alternative investment group Ares Management, in a deal worth up to US$5.2 billion. GCP was established in 2011 when GLP, a logistics operator in Asia, launched its fund management platform. GCP will continue to manage US$81 billion in assets. The deal doubles Ares’ real estate assets under management to some US$96 billion across North America, Europe, Asia and Latin America.

Got a tip, a story to share, or feedback on this newsletter? Let me know at mich@sph.com.sg