Bungalow market starting to move again

Business Times: Sat, Feb 11

AFTER being in deep freeze for several weeks, the bungalow market has started to thaw. This may be due to the firmer stockmarket and seeming improvement in the Eurozone crisis of late, suggest agents. 'The market is surprisingly getting back its momentum and buyers are making offers for units which are reasonably priced,' says William Wong, managing director of RealStar Premier Group, which specialises in bungalows in Good Class Bungalow Areas (GCBAs) as well as other locations on mainland Singapore. He gives a few examples. The owner of a bungalow in the Oei Tiong Ham Park GCBA on land of about 11,000 sq ft had been asking for about $20 million before the introduction of the additional buyer's stamp duty (ABSD) on Dec 8 last year but has now lowered the price tag to $19 million. Over in the Ford Avenue GCBA, the asking price for a bungalow on a 20,000 sq ft plot has been trimmed from $40 million previously to $36 million. 'The quantum of price adjustment depends on the owner's motivation, but they're more receptive nowadays to granting viewing appointments and more prepared to listen to any offers,' says Mr Wong. No caveats for deals in GCBAs have been lodged so far this year, but RealStar has brokered two such transactions. One is at Lornie Road for $16.5 million or $863.90 per square foot based on land area of about 19,100 sq ft. The two-and-a-half storey freehold property, with a built-up area of about 8,700 sq ft, has seven bedrooms and three smaller rooms. The other, near the Coronation area, has been sold for $13 million. It sits on about 11,000 sq ft land. Word on the street is that a deal was sealed this week in the Chestnut GCBA for about $12 million or $983 psf on land area of about 12,209 sq ft. Market watchers note that the introduction of the ABSD on Dec 8 does not have such a big direct impact on the GCB market as on mainland Singapore, buyers of landed residential properties must be Singaporeans or at least permanent residents (PRs). The latter need permission from Land Dealings (Approval) Unit before they can buy a landed home and criteria for such approval were tightened last year. Under the ABSD regime, PRs pay 3 per cent ABSD on their second and subsequent residential property while Singaporeans pay the same ABSD rate on their third and subsequent residential property. Foreigners, however, must pay 10 per cent ABSD on any residential property purchased in Singapore. 'So a Singaporean or PR investor who buys a GCB may be liable for 3 per cent ABSD. On a $30 million GCB purchase, the ABSD would be $900,000 - under $1 million,' said Samuel Eyo, director, prestige homes, at Savills (Singapore) who added negotiations for GCBs are usually done in quantums of '$2-3 million or even $5 million'. He attributes the slowdown in GCB activity during December and January more to the year-end holiday season and festivities stretching upto Chinese New Year in January. 'But the GCB market was hit by overall negative sentiment following the introduction of the ABSD and buyers made full use of this opportunity to try and negotiate for lower prices,' he added. Post-Chinese New Year, GCB viewings have increased, says Mr Eyo. During the Chinese New Year holidays, agents were busy entertaining potential buyers from China for viewings on Sentosa Cove. CBRE director, luxury homes, Douglas Wong, says: 'Although the ABSD does not have a big direct impact on the GCB market, when taken into consideration with the global economic situation, it has dampened the general sentiments of the market. Buyers have adopted a wait-and-see attitude to monitor the property market. A clearer picture may emerge only in three to six months.' Where the ABSD is having a bigger impact is for bungalows on Sentosa Cove, where 37.5 per cent of the 24 bungalows transacted last year were picked up by non-PR foreigners, notes Mr Eyo. Sentosa Cove is the only place in Singapore where non-PR foreigners may buy landed properties, albeit subject to LDAU approval. Newsman Connections managing director Kris Ho, who brokered $192 million of bungalow sales on Sentosa Cove last year, mostly to overseas buyers, reckons that the 10 per cent ABSD may not affect some foreign buyers who are used to paying even higher taxes on property purchases in their home countries. 'I've seen a steady stream of overseas clients from China, Indonesia and Europe for viewings at Sentosa Cove since Chinese Year Year. Owners are so far holding on to their prices,' she added. However, Ms Ho said she does not know of any bungalow deals in the upscale waterfront housing district that were entered into post-ABSD. The last bungalow deals in the area for which caveats were lodged in December are along Cove Drive, at $1,703 psf and $1,782 psf. The highest price achieved for a bungalow in the district last year was $2,610 psf for a property along Ocean Drive on land of about 9,580 sq ft, totalling $25 million, transacted in November. The seller is understood to have incurred a slight loss, taking into account stamp duties and other transaction costs. He had paid nearly $24 million for the property in early January last year. Elsewhere on mainland Singapore outside GCBAs, interest in landed homes has also started to revive, say agents. Caution in the air Says Credo Real Estate managing director Karamjit Singh: 'Buyers are starting to shop around again for landed properties in greater numbers compared to December and January - when ABSD was introduced and during the festivities. 'Most of these buyers seem to be business people or successful professionals in their late 30s onwards, looking for own occupation. Although the crowds are more, there's still caution in the air.' This week, Credo brokered the sale of a unit at Carmine Collection, a development of six freehold semi-detached houses at the hilltop estate of Eng Kong Road/Lorong Kismis in the Jalan Jurong Kechil/Upper Bukit Timah locale. The unit sold is on land of 2,282 sq ft and comes with a home lift and swimming pool. It fetched $3.72 million. RealStar's Mr Wong too reports greater interest in landed homes in the Sunset vicinity - near Clementi, on the outskirts of Bukit Timah - where there are currently more than 10 bungalows on the market. 'Prices in the Sunset area are lower than in central Bukit Timah, for example, Trevose Crescent, University Road and Kheam Hock Road, which appeals to some buyers. As owners see transactions in the vicinity, they too consider putting their homes up for sale,' said Mr Wong. In such non-GCBA locations too, owners have adjusted their price expectations in the past couple of months. For example, the asking price for a bungalow in the Sunset area on land of 6,400 sq ft has gone down from $9 million pre-ABSD to $8 million, he adds. Word in the market is that a two-and-a-half storey bungalow with six bedrooms in the Sunset location changed hands recently at $8.8 million or $1,381 psf on land of about 6,370 sq ft, while a two-storey link-bungalow in the neighbourhood changed hands for about $5.2 million or close to $1,300 psf on land area. Near Trevose Crescent off Dunearn Road, a three-storey renovated bungalow is understood to have been sold last month for nearly $11 million or $1,830 psf on land area of about 6,000 sq ft. Source: Business Times