Biz Times: Prices of good class bungalows still going up, but volume falls

Prices of good class bungalows still going up, but volume falls

25 deals done in H1 worth $440.65m, against 87 deals for 2007 worth $1.15b


THE volume of transactions of good class bungalows (GCBs) may have fallen along with other property sectors but values have not.


A GCB is one that sits on designated land no smaller than 15,000 sq ft. And according to an analysis by CB Richard Ellis (CBRE), there were 25 GCB transaction in the first half of 2008.


While this may be a fraction of the 87 transactions in 2007, the total value for H1 2008 is already $440.65 million, almost 40 per cent of the total value for the whole of 2007 which saw $1.15 billion worth of deals.


There are several explanations for this, including the possibility that bigger GCBs were sold this year, but it also seems clear that prices have risen.


Upon closer analysis, CBRE found that some of the GCBs sold in 2008 had already changed hands once before in 2007. For instance, a house at Fifth Avenue was sold for $17.4 million in June 2007 and then sold again for $19.7 million in March this year – representing a gain of about 13 per cent.


Another house in Cluny Hill was sold in January 2007 for $15 million, re-sold six months later for $20.2 million and then sold again in May this year for $21.5 million.


CBRE director (luxury homes) Douglas Wong says: ‘There is still buying interest in the GCB market as it is always regarded as an attractive investment in the long term and/or for owner-occupation.’


This certainly seems to be supported by the fact that CBRE and Mr Wong handled possibly the biggest GCB deal ever done here – a house in Leedon Park which sold for $43.2 million in May, bought by a Singaporean.


That locals make up the bulk of GCB buyers is interesting as foreigners have been very much credited with bolstering the luxury non-landed sector. Mr Wong also believes that of the estimated 2,400 GCBs in Singapore, these are owned by a small pool of about 1,000 wealthy individuals, suggesting that many own more than one GCB.


In tracking GCB transactions, CBRE found that there were two recent ‘peaks’ in the sector. (CBRE defines ‘peak’ in terms of volume rather than price).


The first peak occurred in 1999, when 77 transactions were recorded after the property market bottomed out during the Asian financial crisis.


The second peak occurred in 2006 with 119 deals done following a protracted period of market stagnation from 2000 to 2004.


In 2006, the 119 GCBs were sold with transacted value totalling $1.225 billion, double the value in 1999.


On average, each GCB cost $9 million to $10 million. In comparison, at the bottom of the market in 2002, the average price of a GCB was $6 million to $7 million.


Of the 25 GCBs sold in H1 2008, about half were sold for over $15 million. Of these, six were sold for more than $20 million.


And as CBRE notes, luxury properties are often seen as a barometer of the health of the overall market. When there are signs of the market turning, GCBs and luxury apartments will reflect this first and post bigger gains ahead of the broader residential market.


So it is good news then that for the rest of the year, CBRE expects GCB prices to remain firm or even see a marginal upside.


Source: Business Times

Apartments above $10m still shine in dull market

Apartments above $10m still shine in dull market

In the landed sector, demand for GCBs remains strong, says CBRE


(SINGAPORE) The high-end residential sector has been largely subdued in 2008, but at least 50 luxury apartments costing above $10 million each have been sold so far this year. And the tally for the full year, according to property consultant CB Richard Ellis (CBRE), is expected to come in at about 70 to 100 units.


This will be lower than the 139 such units sold for the whole of 2007, but still significantly higher than the 2006 full-year figure of 23 units, CBRE’s research shows.


Putting things in perspective, CBRE Singapore’s managing director Pauline Goh says: ‘One point to note is that luxury home prices in 2006 were lower than in 2007. Hence, fewer units would have touched the $10 million mark back in 2006. There was also a smaller supply of upscale developments with big units back then compared with 2007 and H1 2008.’


The 50-odd luxury apartments costing above $10 million each sold so far this year are the tally at June 17 and include not just units sold at Nassim Park Residences, which was previewed in May, but also a unit each transacted at Cliveden at Grange, The Tomlinson, The Grange and The Orange Grove condos.


BT understands that the highest-priced transaction so far this year is a $19.7 million ground-floor unit sold at Nassim Park Residences.


In the landed sector, a total of 23 Good Class Bungalows (GCBs) have changed hands so far this year for a total of $380 million.


‘We’re quite confident that at least 50 to 60 GCBs will be sold for the whole of 2008. Demand will continue to be strong from Singaporeans as well as PRs, but deals are limited by availability of GCB stock,’ Ms Goh predicts.


Last year, a total of 87 GCB deals totalling $1.15 billion were sealed, against the record 119 transactions worth $1.23 billion in 2006.


As for the outlook for luxury apartment sales, Ms Goh says: ‘Singapore has a lot going for it; the government has put in so much effort to build Singapore into a global city. We’ll have the integrated resorts, special events like Youth Olympic Games and F1 night race. Singapore is on the radar screens of a lot of international investors. However, the flow of bad news from the US has to stabilise before confidence returns.


‘On the other hand, as Nassim Park Residences shows, if the product is right, there can be very, very strong demand. The project is in a very niche location; arguably the best luxury location in Singapore.’


Market watchers say the volume of transactions for apartments costing more than $10 million for the rest of 2008 will depend partly on when developers release new prime-district condos and their strategy on the mix of unit sizes.


Developers have tended to veer towards bigger units in the past couple of years but some analysts say some developers are now considering changing tack for upcoming projects. These developers are wondering whether it will make more sense now to have a higher proportion of smaller units – given weaker sentiment.


‘The idea is to make the absolute price quantums smaller, say $3-5 million per apartment, which will mean a bigger pool of buyers, compared with having a lot of biggish units in a project costing, say, above $10 million,’ an analyst says.


Source: Business Times