Legacy building through landed homes
Many GCBs sit on freehold land or land with long initial leases, such as 999 years
DETACHED homes in Good Class Bungalow (GCB) enclaves represent the pinnacle of Singapore’s residential property market.
Bungalows in GCB Areas stand out with their large plot sizes and locations in lush, green surroundings. GCBs command rarity value, as there are only about 2,700 of them islandwide. Many GCBs sit on freehold land or land with long initial leases, such as 999 years. Some families who own such houses are keen to pass them to future generations as part of their legacy.
The Urban Redevelopment Authority (URA) imposes strict planning conditions for GCB Areas. Among other things, a minimum plot size of 1,400 square metres (about 15,070 square feet) is stipulated as the planning norm for newly created bungalows in GCB Areas. Another restriction is a two-storey height limit, though an attic and a basement are allowed.
Among the 39 designated GCB Areas, a Nassim Road address is possibly the most coveted. Earlier this year, the Fangiono family behind Singapore-listed palm oil producer First Resources bought four bungalows in Nassim Road for a total of about S$295 million. Cuscaden Peak Investments sold a trio of Nassim Road bungalows to the family for nearly S$207 million, or about S$4,500 per square foot (psf) of land area.
GCBs and Sentosa Cove bungalows
Still, there has been a marked slow-down in GCB transactions this year. Consultancy List Sotheby International Realty (List SIR) says this could be due to the widening gap between sellers’ and buyers’ price expectations, as well as a weaker global economy.
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Based on analysis of data from URA Realis as at Sep 8, List SIR found caveats lodged for 12 GCB transactions worth around S$300 million in year-to-date (YTD) 2023, with average price psf of land of S$1,936. In 2022, there were 44 GCB transactions worth S$1.19 billion, at an average price of S$1,870 psf. The transaction data does not capture sales without caveats lodged, such as the sale of the Nassim Road houses to the Fangiono family.
List SIR expects to see around 20 GCB deals this year from caveats lodged, and firm prices amid the decent level of demand.
In Sentosa Cove, List SIR’s analysis of URA Realis’ data as at Sep 8 showed there were seven bungalows sold in YTD 2023 for a total of about S$139 million at an average price of S$2,214 psf. In 2022, there were 18 transactions of Sentosa Cove bungalows worth around S$338 million at an average price of S$1,940 psf.
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While buying of landed homes in Singapore is generally restricted to Singapore citizens, foreigners can buy landed homes in Sentosa Cove.
Market performance
In the wider luxury landed homes market, transaction volume has risen, according to Edmund Tie. The consultancy noted that transaction volume for luxury landed homes jumped by 30 per cent in H1 2023 to 52 units, from 40 units in H2 2022. Sales quantum rose by 24 per cent in H1 2023 to S$1.06 billion from S$860 million in H2 2022. Edmund Tie defines luxury homes as private homes in the Core Central Region that are priced at S$10 million and above.
In contrast, the consultancy noted that the volume and value of non-landed luxury homes transactions fell in H1 2023 versus H2 2022. Looking ahead, Edmund Tie sees support for landed homes coming from buoyant housing demand amid tight supply for luxury landed homes.
Compared to pre-Covid pandemic days, prices of private landed homes in Singapore rose faster than those of private non-landed homes. According to URA’s data, landed and non-landed home prices jumped by 35 per cent and 24 per cent respectively between Q4 2019 and Q2 2023.
Analysing transaction records from URA, Leonard Tay, head of research, Knight Frank Singapore, notes that district 19, particularly the Serangoon Gardens and Hougang neighbourhoods where most of the landed houses within the district are located, is popular with landed home buyers.
District 19 accounted for the highest number of landed home sales, with 378 units in 2020; 642 in 2021; and 337 in 2022. The district accounted for 17.9 per cent, 17.3 per cent and 16.2 per cent of the total landed homes transacted for 2020, 2021 and 2022 respectively.
District 15, which covers Marine Parade, Katong, East Coast and Joo Chiat, was the next most active district for landed home transactions.
Terrace houses do well
Knight Frank’s Tay observed that the median unit price on land for semi-detached and terrace houses grew at a compounded annual growth rate of 2 per cent and 3.4 per cent respectively between 2012 and 2022. He says the stronger price performance of terrace houses is because such homes offer the most palatable entry levels, based on price quantum for non-landed upgraders with landed housing aspirations.
Analysing data from URA Realis, Tay noted the median unit price on land for semi-detached and terrace homes rose 2.4 per cent and 16.4 per cent respectively in 2022. Based on data up to Aug 21, the median unit price on land for semi-detached and terrace homes increased 10.2 per cent and 9.9 per cent respectively.
The latest round of property cooling measures, which saw higher Additional Buyer’s Stamp Duty (ABSD) for groups such as foreigners and local multiple home buyers, may have left landed housing demand relatively unscathed, given many landed property buyers are locals buying their first homes. A Singapore citizen buying his first home pays zero ABSD.
List SIR notes that GCB buyers include new citizens as well as local new millionaires and ultra-high-net-worth investors who are buying their first home, and hence will not be subject to ABSD.
On the other hand, the Sentosa Cove bungalow market, which draws demand from foreigners, may be reeling from April’s ABSD hike. Moreover, recent news of money laundering activity involving homes on the resort island will contribute to a slowdown in sales in this segment, notes List SIR.
The consultancy expects the Sentosa Cove bungalow market to remain subdued in the short term. It expects prices of Sentosa Cove bungalows to adjust downwards to lure locals to buy the homes for use as vacation homes or for rental income.
Knight Frank’s Tay notes that yields for landed homes are generally under 2.5 per cent, as price premiums are often needed to incentivise sellers to enter a transaction. However, yield may matter little for landed home buyers. Tay believes many people buy landed homes for owner occupation and capital appreciation, more so than for recurring returns.
Generally, households here are getting smaller. Well-designed compact apartments can thus serve as suitable abodes for many households.
Nonetheless, in dense Singapore, many people yearn for larger living spaces, and aspire to upgrade to bigger homes with outdoor areas. Also, there are extended families living together who seek landed housing.
Landed homes can meet the needs of people who want more built-in and/or outdoor space, as well as bespoke spaces that meet a household’s needs. Likely, landed homes, which sit atop Singapore’s housing pyramid, hold an enduring appeal.
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