SINGAPORE RESIDENTIAL LUXURY BUNGALOWS Key Indicators H1 217 vs. H1 216 Good Class Bungalows 2 $21.61 mil $1,242 Sales Vol. Avg. Price $ psf Sentosa Cove Bungalows 7 $14.66 mil $1,555 Sales Vol. Avg. Price $ psf Good Class Bungalows Good Class Bungalows (GCBs) are touted as the most coveted type of housing in the Singapore residential market. All GCBs have freehold tenure. Urban Redevelopment Authority (URA) has indicated that there are about 2,8 plots in 39 gazetted Good Class Bungalow Areas (GCBAs). While most of the GCBAs are located in three of the traditional prime districts (1, 11 and 21), two others are found outside the prime districts at Chestnut Avenue in Bukit Panjang (district 23) and Windsor Park in Upper Thomson (district 2). According to URA planning guidelines, the minimum land size of each GCB is 1,4 sq. m. or about 15,7 sq. ft. GCBs are subjected to a height restriction of two storeys although an attic and basement may be allowed. In addition, there are special planning parameters for site coverage control and building setbacks to ensure enough open space around each bungalow and to protect the existing exclusive environment of these established bungalow areas. However, not all the bungalows in the GCBAs are of the same size, age, architectural design and built-quality. Based on these factors, each GCB commands different price tags ranging between $1 mil and $5 mil. Since they were gazetted in the 198 Master Plan, the 39 GCBAs have remained largely the same and currently, the government has no plans to create new GCBAs. GCBs are classified as restricted properties and only Singapore citizens are allowed to buy the landed properties in GCBAs.
Sentosa Cove Bungalows Stirrings in the luxury market In contrast, foreigners are allowed to buy and own landed properties including bungalows at Sentosa Cove, although government approval is required. The application for approval process for foreigners to buy landed properties at Sentosa Cove has been fast-tracked, some to just a few days. Conceptualised by the government in the 198s, Sentosa Cove was designed to be a prime residential zone on the resort island of Sentosa. Sentosa Cove covers an area of 117 ha on the eastern side of Sentosa Island, and in addition to the main residential area are five man-made islands called Coral Island, Paradise Island, Treasure Island, Sandy Island and Pearl Island. Most of the land is designated for residential accommodation, with the five islands reserved for bungalows. The non-residential developments within Sentosa Cove are a private marina (One 15), a retail cum F&B complex (Quayside Isle) and a 32-room hotel (W Singapore Sentosa Cove). As at 215, there are around 2,16 homes in Sentosa Cove, and condominiums made up approximately 8%. About 4 units are bungalows. Although all residential homes are of 99 years leasehold tenure, there is always a healthy interest in Sentosa Cove s bungalows because of their exclusivity, limited supply and eligibility for foreigners to own them. Similar to the GCB market, there are currently no plans to increase the housing supply in Sentosa Cove. Transaction Volume (Units Sold) Interest in GCBs and the bungalows at Sentosa Cove picked up in the first half of 217. Based on caveats lodged, 2 GCBs and seven bungalows at Sentosa Cove have been transacted compared to 14 GCBs and none at Sentosa Cove over the same period in 216. At this pace, the GCB market in 217 could perform better than in 216 which clocked in a total sales volume of 37 GCBs. As for Sentosa Cove, the bungalow market has already outperformed the 216 sales volume. The pickup in interest in such luxury bungalows could be attributed to two reasons: Firstly, there was a general improvement in market sentiment since the beginning of the year. This was reflected in the strong take-up of recent new launches, as well as completed projects which developers were actively marketing through innovative financial packages. Secondly, the gradual price corrections over 14 quarters which have brought prices, particularly that of luxury homes, to more realistic levels. Astute investors who have been waiting on the side-lines have started to enter the market since Q2 216. Based on caveats lodged, the 2 GCBs that were sold in H1 217 amounted to an investment value of $432.21 mil or $1,242 psf on land area. This compares with the value of $298.36 mil or $1,318 psf for the 14 GCBs sold in the same period in 216. The most expensive GCB sold in 217 was a 29,78 sq.ft-property at Queen Astrid Park which was transacted at $46. mil or $1,548 psf. In 216, the highest price of $56.58 mil or $1,556 psf was achieved by a 36,365 sq.ft-property at Nassim Road. 14 12 1 8 6 4 2 28 29 21 211 212 213 214 215 216 217H1 GCB Note: Based on caveat data downloaded on 27 June 217 Sentosa Cove Bungalows
Granted that every GCB is unique in terms of location, size, design, age and quality, the transactions in 217 are evidence that astute investors are entering the market amidst softening prices. As for the transactions in Sentosa Cove, the seven bungalows sold in H1 217 totalled $12.65 mil or $1,555 psf on land area, compared to the four bungalows that were sold in the whole of 216 at $64.5 mil or $1,881 psf on land area. Notably, in 217, the highest price of $21.25 mil or $1,886 psf was for bungalow at Lakeshore View with a land area of 11,27 sq. ft. whereas in 216, a 9,58 sq. ft.- bungalow located at Ocean Drive achieved a record price of $28. mil or $2,923 psf. Again, this shows savvy investors re-entering the Sentosa Cove market after staying away for the past three years. It is a signal that buyers are seeing good value at the current pricing levels. It is still too early to expect a full residential market recovery as our economic fundamentals are still consolidating due to the varied performances among the electronics and precision engineering, manufacturing, construction and service sectors. The GDP growth for 217 was 2.5%, lower than the 2.9% growth in the previous quarter. The current unemployment rate is also inching upwards among the mid-career professionals. On the global stage, uncertainties and downside risks remain as Europe wrestles with political reforms and navigates through the Brexit process, and the protectionist trade policies the trump administration intends to implement. In terms of the profile of buyers, it has been reported that some of the GCBs were purchased by foreign nationals who had become Singapore citizens. Likewise, some of the buyers of the bungalows in Sentosa Cove could be new citizens, although foreign ownership is allowed. While the Additional Buyer s Stamp Duty (a tax imposed on foreign buyers or buyers of multiple residential properties in Singapore) remains, luxury homes in Singapore look attractive to foreign high-net-worth individuals as compared with countries like Hong Kong and London where similar foreign-ownership tax is higher than the 15% additional buyer s stamp duty payable here. Transaction Value ($ mil) & Land Rate ($ psf) 2,5 2,5 2, 2, 1,5 1,5 1, 1, 5 5 28 29 21 211 212 213 214 215 216 217H1 $ Mil $ psf GCB Sentosa Cove Bungalows GCB ($ psf) Sentosa Cove Bungalows ($ psf) Note: Based on caveat data downloaded on 27 June 217
Despite the challenging sentiments, the luxury landed residential market has time and again shown its resilience. In the past two decades, a pick-up in the sales activity of the GCB market during a downturn had seemingly acted as a stimulus to boost the sale of new homes. This happened in 1999 during the Asian Financial Crisis, in 24-6 as the economy was recovering from the recession and again in 29-1, amidst the subprime mortgage-led Global Financial Crisis. The return of confidence of astute GCB investors had underpinned the recovery of the luxury market. Fast forward to the first half of 217, the recent GCB deals were largely premised on sellers lowering their price expectations to more realistic levels. As well, the return of volume could point to a return of confidence. Already, the estimated new home sales volume in the first half of 217 is around 6, units, which looks set to outperform 216 s sales volume of 7,972 new homes. As volume returns, it will help to stabilise prices. The trough is certainly near, and home prices could reach the point of inflection soon. Sales Volume: GCBs, Sentosa Cove Bungalows & New Home Sales
Transactions of Luxury Homes in H1 217 Address Land Area (sq. ft.) Transacted Price Unit Price (psf) Sale Date Bungalows in GCB Areas 1 Gallop Park 17,39 $22,888, $1343 19-June-17 2 Queen Astrid Park 29,79 $46,, $1548 12-June-17 3 Leedon Park 31,216 $4,88, $131 9-June-17 4 Gentle Road 7,492 $11,, $1469 5-June-17 5 Queen Astrid Park 9,451 $13,, $1,376 26-May-17 6 Namly Hill 8,62 $11,3, $1,42 24-May-17 7 Gentle Road 18,579 $22,5, $1,211 17-May-17 8 Chatsworth Road 13,34 $2,, $1,53 12-May-17 9 Oriole Crescent 1, $13,2, $1,32 28-Apr-17 1 Chestnut Drive 1,882 $11,38, $1,46 27-Apr-17 11 Oriole Crescent 8,514 $14,, $1,645 24-Apr-17 12 Chancery Lane 17,847 $21,888, $1,227 21-Apr-17 13 Binjai Park 12,26 $12,5, $1,2 18-Apr-17 14 Victoria Park Close 29,956 $4,, $1,335 12-Apr-17 15 Ewart Park 15,468 $15,928,95 $1,3 1-Apr-17 16 Namly Hill 7,696 $13,5, $1,755 23-Mar-17 17 Garlick Avenue 27,825 $23,88, $858 22-Feb-17 18 King Albert Park 39,224 $43,8, $1,117 21-Feb-17 19 Jalan Kampong Chantek 27,52 $27,588,888 $1,3 1-Feb-17 2 Yarwood Avenue 5,985 $6,98, $1,167 6-Feb-17 Total $432,213,838 Bungalows at Sentosa Cove 1 Cove Grove 9,731 $16,6, $1,76 8-June-17 2 Cove Grove 11,517 $14,5, $1,259 5-May-17 3 Cove Grove 9,354 $16,8, $1,797 17-Apr-17 4 Ocean Drive 7,384 $12,5, $1,694 4-Apr-17 5 Cove Drive 7,416 $1,, $1,348 3-Apr-17 6 Coral Island 9,322 $11,, $1,18 21-Mar-17 7 Lakeshore View 11,27 $21,25, $1,886 1-Mar-17 Total $12,65, Note: Transaction volume is based on caveat data downloaded on 27 June 217 Research Mireille Wan (CEA Reg. No. R5192F) Managing Director, Research, Consulting & International Project Marketing +65 654 1112 mireille.wan@listsothebysrealty.sg Han Huan Mei Associate Director, Research +65 654 1121 huanmei.han@listsothebysrealty.sg Research Office Address: 991A Alexandra Road, #2-6/7 Singapore 119969 List Sotheby s International Realty, Singapore. Sotheby s International Realty and the Sotheby s International Realty logo are registered (or unregistered) service marks used with permission. Each Office Is Independently Owned And Operated. This letter/proposal is intended solely as a preliminary expression of general intentions and is to be used for discussion purposes only. The parties intend that neither shall have any contractual obligations to the other with respect to the matters referred herein unless and until a definitive agreement has been fully executed and delivered by the parties. The parties agree that this letter/proposal is not intended to create any agreement or obligation by either party to negotiate a definitive agreement, and imposes no duty whatsoever on either party to continue negotiations, including without limitation any obligation to negotiate in good faith or in any way other than at arm s length. Prior to delivery of a definitive executed agreement, and without any liability to the other party, either party may (1) propose different terms from those summarized herein, (2) enter into negotiations with other parties and/or (3) unilaterally terminate all negotiations with the other party hereto.