In the world of the mega-rich, the market for Good Class Bungalows (GCBs) has seen substantial growth this year compared to 2023, as revealed by Han Huan Mei, director of research at List Sotheby’s International Realty.
As of Dec 20, an impressive 22 GCB transactions worth $612.05 million have been recorded through URA Realis. On top of that, an additional 13 GCB deals, collectively valued at over $700 million, were finalised this year without caveats being lodged, as buyers sought anonymity. This brings the estimated total for 2024 to 35 GCB transactions worth approximately $1.32 billion, according to List Sotheby’s estimates, greatly surpassing the previous high of $1.186 billion achieved in 2022.
In comparison, 2023 saw only 18 GCB transactions, amounting to $432.5 million – the lowest number of deals recorded since URA Realis began tracking such data in January 1995.
According to Han, “The additional deals in 2024 show that the GCB market has been more active compared to what official transaction data reveals,”. She adds, “It also reinforces the status of GCBs as a highly coveted asset that is constantly sought after by ultra-high-net-worth buyers.”
The Highest Priced GCB Deals
The sale of a GCB at Tanglin Hill for a staggering $93.888 million tops the charts. The property, which sits on a freehold site measuring 15,150 sq ft, has a built-up area of 29,660 sq ft – a record-breaking land rate of $6,197 psf.
The second-highest GCB transaction was the $84 million purchase at Bin Tong Park by Xiang Yangyang, daughter of Chinese nickel billionaire Xiang Guangda, according to a document search. However, no caveat was lodged for the property. Based on the land area of 28,111 sq ft, the price equates to a land rate of $2,988 psf.
The highest-priced deal based on lodged caveats was for a GCB on Cluny Hill, which was sold for $52 million. The property, which sits on a freehold plot of 15,141 sq ft and is relatively new, fetched a land rate of $3,434 psf.
Mohan Sandrasegeran, head of research and data analytics at Singapore Realtors Inc (SRI), notes that at least 14 transactions this year were valued at $20 million or more, highlighting the strong demand for ultra-luxury properties in Singapore.
Top Districts for GCBs
Sandrasegeran adds, “District 10 remains the cornerstone of the GCB market, with multiple high-value deals reaffirming its status as the most sought-after district for these prestigious properties.” Of the recorded GCB transactions this year, 16 took place in prime District 10, including the coveted Tanglin, Bukit Timah, and Holland Road areas.
When considering investing in a condo in Singapore, one must also take into account the government’s property cooling measures. In order to maintain a steady real estate market and discourage speculative buying, the Singaporean government has implemented several measures over the years. These measures, such as the Additional Buyer’s Stamp Duty (ABSD), impose higher taxes on foreign buyers and those purchasing multiple properties. While these measures may affect the immediate profitability of investing in a condo, they ultimately contribute to the long-term stability of the market, creating a more secure investment environment. Additionally, with the option of investing in a condo, individuals have the opportunity to diversify their investment portfolio and potentially see a greater return on their investment in the future.
Sustained Buying Activity
According to Sandrasegeran, GCB transactions were evenly spread throughout the year, with buying activity picking up from July. “Overall, the fact that we saw GCB deals closing throughout the year suggests sustained buying interest for these trophy properties despite external economic factors, such as inflationary pressures and the presence of high interest rates in the first eight months of the year,” he says.
Steve Tay, co-founder and executive director of his eponymous boutique luxury agency in Singapore, says that it was the trajectory of interest rates signalled by the US Federal Reserve (Fed), rather than the rate cuts themselves, that was the primary driver of stronger buying sentiment in the GCB market during the second half of the year.
The Fed implemented three rate cuts this year: a recent 25 basis point (bp) reduction on Dec 18, following earlier cuts of 50 bp in September and 25 bp in November. Most GCB buyers who had been holding back on their purchases since July began fielding more serious discussions, with most deals closing in the last quarter of this year, Tay notes.
The Impact of Money Laundering Crackdown
The GCB market saw a slowdown last year as buyers retreated following the island-wide arrests of suspects in Singapore’s biggest money-laundering case, says List Sotheby’s Han.
“The money laundering crackdown had a dampening effect on the market, causing some genuine buyers to pull back to avoid media attention,” she adds. “Transactions also took longer to close due to heightened scrutiny and stricter checks on buyers’ identities and sources of funds.”
A New Generation of GCB Buyers
In recent years, a new generation of ultra-wealthy Singaporeans has emerged in the GCB market, says Tay. This has seen a good number of young and successful entrepreneurs who have amassed their fortunes in technology, finance, commodities, and F&B businesses partake in the market. Tay adds that the market also reflects the exclusive pool of GCB buyers that prefer sizeable plots in prime districts, made up of ultra-wealthy and newly naturalised Singaporeans. However, according to Tay, the number of naturalised citizens buying GCBs remains comparatively low.
According to research from List Sotheby’s, the cost of developing a new GCB from the ground up is estimated at about $1,000 psf. Additionally, the construction also takes several years to complete. Hence, most buyers are searching for relatively new bungalows in move-in condition that require minimal renovation, observes Han.
“The GCB market will likely maintain its positive momentum, with demand from ultra-high-net-worth individuals driving its high-value transactions,” says Sandrasegeran. “The preference for privacy among GCB buyers and sellers could mean continued off-market transactions, adding the complexity of tracking market activity.”