All Quiet On The Good Class Bungalow (GCB) Front?

By Wong Siew Ying

Good class bungalows (GCB) tend to make the news when they are transacted – which came up quite frequently in 2021 when the GCB market was roaring. In 2021, about 90 GCBs with a combined transacted value of some $2.6 billion changed hands. Market activity has slowed considerably in 2022, where 44 GCBs were sold for a total value of about $1.2 billion.

In 2023, however, there have not been too many GCB deals. Based on caveats lodged (till 8 May 2023), 7 GCBs have been brokered in just over 4 months of the year. It was reported that a portfolio of three GCBs at Nassim Road was transacted in April for $206.7 million ($4,500 psf), although there are no caveats lodged for the deal on URA Realis at the time of writing.

Even so, it seems like GCB sales which were sizzling just two years ago are somewhat fizzling out. PropNex Picks spoke to Henry Benjamin Lim, Head of GCB and Prestige Landed department at PropNex to find out if all is quiet on the GCB front and what’s the market outlook ahead for this crème de la crème residential property segment in Singapore.

1. GCB sales have slowed down this year, why do you think this is so?
HBL: We saw a strong run up in sales in 2021, and the GCB market was also healthy in 2022. I would say this segment has been oversold in those two years, leading to a lack of stock available for selection currently. Based on our observations, there is still buying interest but the stock available for sale is very limited.

In addition, by our estimates, the average price of GCBs sold has also climbed from just over $1,460 psf in 2020 to nearly $1,680 psf in 2021, and then to more than $1,900 psf in 2022. The price increase created some resistance on the part of the buyer, but sellers are still holding firm to their asking price. This mismatch in price expectations is another reason why transaction volume has not been moving as much. With the limited availability of GCBs in the market, asking prices of GCB properties have gradually gone up and will likely remain firm due to their tight supply.

We note that the demand for GCBs in 2021 and 2022 was well-supported by top executives from tech firms and cryptocurrency companies. However, with the slump in the crypto market and the tech downturn recently, the interest in GCBs from these buyers has waned compared to the previous years. This pullback in interest will weigh on overall GCB sales in the short-term. Concerns over a global economic slowdown and market uncertainties also see prospective buyers take on a more cautious stance.

However, do note that some GCB deals may not be reflected in the caveat data as the buyers did not lodge a caveat for the purchase. Hence, the actual sales volume is likely to be higher. For example, Cuscaden Peak Investments sold three freehold GCBs in Nassim Road for a record land rate of $4,500 psf in April – which were not indicated in the caveat data.

2. What are some GCB properties that your team is marketing and what has been the market interest?
HBL: Many GCB owners tend to prefer a low-profile approach to marketing their detached houses. Typically, we would tap into our clientele network for prospective buyers; we would also receive enquiries from interested parties. After carefully assessing their requirements and budget, we will make a shortlist of GCBs or prestige landed homes that are suitable, and set up viewings when the buyer has identified the GCBs of interest.

Presently, we are marketing a selection of GCBs ranging from 15,000 sq ft and above – both newly built and old properties – in Nassim Road, Gallop Road, Dalvey Estate, Jervois Road, Bishopsgate, Tanglin Hill, Leedon Park, Wilby Road, Binjai Park, Brizay Park, King Albert Park off Bukit Timah Road, Yarwood Avenue, as well as the Chestnut Avenue GCB area.

3. Who are the key clienteles of GCBs and has the profile of buyers changed over the years?
HBL: GCBs are the most prestigious landed housing type in Singapore and they are seen as a status symbol. Over the years, the key buyers of GCBS have been ultra-high net worth individuals, successful professionals, top executives and businessmen. Most of the GCB buyers are Singaporeans, with a number of them being freshly minted Singapore citizens who were formerly from China or Indonesia. In the last couple of years, there was also an emerging trend of rising GCB demand from younger buyers, such as CEO of tech companies like Razer, Secretlab and TikTok.

4. What are the main draws of buying GCBs, are they good for value retention?
HBL: The vast majority of GCB transactions are properties with freehold land tenure. Many of the GCB buyers are purchasing such properties for legacy planning and wealth preservation. GCBs are in a class of their own given their rarity, prestige factor, and limited supply in land scarce Singapore. These attributes, on top of their freehold tenure make GCBs ideal for capital protection and appreciation over the long-term.

Due to the geographical spread of GCBs, we tend to see more such deals being done in District 10 in GCB areas such as Nassim Road, Leedon Park, Dalvey Estate, Garlick Avenue, Chatsworth Park, Cluny Hill, and Jervois Road amongst others.

5. Do you think the cooling measures introduced in April 2023 will impact the GCB market?
HBL: The government hiked additional buyer’s stamp duty (ABSD) rate for foreigners from 30% to 60% from 27 April 2023. As GCB buyers are usually locals who are purchasing their first residential property, I would say the impact from the April 2023 cooling measures will be minimal on the GCB segment in terms of the demand side.

We expect the GCB sales volume to likely hover around the levels seen in 2022 or just slightly below that – not because of the cooling measures, but largely due to the limited stock of GCBs available for sale on the market. These properties are tightly-held and would-be GCB sellers are usually not in a hurry to dispose of such prized assets unless the price is right.

If you are looking for high-end landed homes or GCBs in Singapore, contact PropNex’s GCB and Prestige Landed sales department today for buying opportunities and insights on the landed residential property market.

Download PropNex GCB & Prestige Landed Research Report for 2H 2022.

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