Bungalow deals see a jump after ‘circuit breaker’ pause

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/ EdgeProp Singapore
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August 21, 2020 6:00 AM SGT
SINGAPORE (EDGEPROP) - In the rarefied world of the rich, transaction activity in the bungalow market has picked up in the past two months. Recently, a Good Class Bungalow (GCB) on Cable Road, located opposite the High Commission of Malaysia in the Jervois area was sold for $18.9 million ($1,456 psf). The two-storey, five-bedroom detached house with swimming pool sits on a freehold land site of 12,981 sq ft. It was a mortgagee sale, and had been on the market since last year.
Good Class Bungalow at Mount Echo Park - EDGEPROP Singapore
Good Class Bungalow at Mount Echo Park that was recently sold for about $27 million (Photo: Albert Chua/EdgeProp Singapore)
On Chatsworth Road, off Tanglin Road, a GCB sitting on a 14,995 sq ft, freehold site was sold for $28 million ($1,867 psf), also in early August. The deal was brokered jointly by Steve Tay, senior associate vice president of List Sotheby’s International Realty, who represented the buyer, and KH Tan, managing director of Newsman Realty, who represented the seller.
Just off Jervois Road is Mount Echo Park, where another GCB changed hands recently for about $27 million ($1,781 psf), although a cave- at has not been lodged. List Sotheby’s Tay and Newsman Realty were also said to have acted jointly on the sale, on behalf of the owner and the buyer respectively.
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These deals were all completed in Phase Two reopening on June 19 after the “circuit breaker” period, when prospective buyers and agents were allowed to visit the property and gauge the suitability for their requirements, notes List Sotheby’s Tay. No matter how affluent, these buyers prefer to view the physical property before making a purchase, especially given that these are big-ticket purchases. “Sometimes, the views may be blocked, or there could be building limitations to the site, which are not evident from the plans alone,” he explains.
The Good Class Bungalow at Chatsworth Road - EDGEPROP Singapore
The Good Class Bungalow at Chatsworth Road that was sold for $28 million earlier this month (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Pent-up demand, realistic pricing

Tay credits the spike in transactions partly to pent-up demand that had built up during the two-month-long circuit breaker. “Big families felt a greater need for space and privacy with everyone working from home and children doing home-based learning, especially those living in apartments and even penthouses,” he says. “Being confined together also reinforced the thought of owning a landed property, which spurred many into action when the lockdown measures were eased and property viewings allowed.”
Owners have also become more realistic in their pricing given the Covid-19 pandemic. “Rather than holding onto a bullish outlook, they are more prepared to consider a fair and reasonable offer,” acknowledges Tay. Given the healthy demand, many of the GCBs sold recently were done at prices that were higher than the offers received towards the end of 2019 and early 2020, he notes. He attributes this to the recovering equities market and low interest rate environment.
Most of the buyers today are Singaporean families, who are upgrading from a smaller bungalow to a GCB or transitioning from another GCB area to a more central location, says Tay. The buyers of the GCB at both Chatsworth and Mount Echo Park are Singaporeans.
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Tay - EDGEPROP Singapore
Tay: Big families felt a greater need for space and privacy with everyone working from home and children doing home-based learning, especially those living in apartments and even penthouses. Being confined together also reinforced the thought of owning a landed property, which spurred many into action when the lockdown measures were eased and property viewings allowed (Photo: Albert Chua/EdgeProp Singapore)
“They have been waiting to buy for the last few years, and given that prices have softened a little, they feel that it’s a good time to re-enter the market,” says Newsman’s Tan. “There’s confidence in Singapore’s long-term prospects.”
Newly-minted Singapore citizens remain “serious buyers”, notes Tan, especially former Chinese and Indonesian nationals, who have traditionally gravitated towards the GCB market.

‘Seizing opportunities’

William Wong, managing director of Realstar Premier Group, says his firm brokered the sale of five GCBs in the last two months, mainly in the $20–$30 million range. They include GCBs on Old Holland Road, Garlick Avenue and Margoliouth Road.
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Bungalow Transactions in GCB Areas - EDGEPROP Singapore
“Some of these buyers had been waiting on the sidelines as they initially thought the market might tank, but when they saw good plots emerge on the market for sale, they decided to seize the opportunity,” says Wong. “Good plots in good locations don’t come by that often. There’s a belief that a lot of the ultra high net worth capital has made its way to Singapore, hence, the optimism in the luxury bungalow segment.”
Sales momentum in the GCB market had been slow in 1H2020, largely due to the Covid-19 circuit breaker measures that had put a pause on most property market activity for much of the second quarter. However, Wong expects the current pick-up in activity and sales momentum to gain traction at least for the rest of the year.
It is not just GCBs that have seen a bounce in activity — even those in the established private estates outside the Central area are experiencing one. For instance, in the Katong area in prime District 15, a bungalow sitting on a freehold site of 7,352 sq ft on Goodman Road was sold for $9.08 million ($1,235 psf) in July. Meanwhile, also in the Katong area, another bungalow sitting on a 6,017 sq ft, freehold site on Crescent Road fetched $9.08 million ($1,509 psf), according to a caveat lodged in June.
Bungalow at Sunset Walk - EDGEPROP Singapore
Bungalow at Sunset Walk that recently changed hands for $10 million (Photo: Samuel Isaac Chua/EdgeProp Singapore)
In the Sunset area, off Clementi Road, a bungalow at Sunset Walk recently changed hands for $10 million ($953 psf). The double-storey house has a built-up area of about 7,000 sq ft and sits on a freehold land area of 10,495 sq ft. The buyer is a Singaporean.

Sentosa Cove — silver lining ahead?

Even in Sentosa Cove, activity has picked up, with bungalow viewings and offers made showing an increase, notes Tay. “Besides the high networth clients from China, there has also been an increase in enquiries from Indonesia, India, Malaysia and Europe,” he adds. “Some of these buyers are already permanent residents [PRs] in Singapore and currently residing in an apartment on the mainland. They now appreciate the value of having more space in a bungalow, especially during the circuit breaker.”
Clouds had gathered at Sentosa Cove since 2018, when mortgagee sales of bungalows started to surface at Coral Island, Paradise Island and Sandy Island. “That has led to a misconception on the perceived value of waterfront bungalows in Sentosa Cove,” says List Sotheby’s Tay.
Cove Grove - EDGEPROP Singapore
View of bungalows with private berths along Cove Grove from the roof terrace of the bungalow on Pearl Island that was sold recently for $25 million (Photo: The Edge Singapore)
Sentosa Cove is still the only residential enclave with walkways along the oceanfront, gated community with 24-hour security and direct access to beaches and amenities on the island, reasons Tay. Sentosa Cove is also the only area where foreigners and PRs are allowed to buy bungalows and landed property with views overlooking the sea, waterway, lakes or golf course. “Some residents have said that it’s like living on a holiday resort island, especially during the circuit-breaker when they can enjoy a stroll along the landscaped paths or cycle to the beach,” he adds.
Another upside to Sentosa Cove is the master plan for the Greater Southern Waterfront, which includes the development of Sentosa Island and Pulau Brani into a leisure and tourism destination in the future. Genting Singapore has committed to a $4.5-billion expansion and revamp of Resorts World Sentosa, its integrated development on the island, even though it will be delayed due to construction disruption caused by Covid-19.

Demand driven by owner-occupiers

List Sotheby’s Tay remains confident in the future growth of Sentosa Cove. Based on cave- ats lodged to date, there were five bungalow deals in Sentosa Cove in the first five months of 2020 (See table at the bottom). This is one more than the total deals done for the whole of 2019, points out Han Huan Mei, director of research at List Sotheby’s International Realty.
Bungalow at Cove Grove - EDGEPROP Singapore
Bungalow at Cove Grove that fetched $24 million ($2,464 psf) in February (Photo: Samuel Isaac Chua/EdgeProp Singapore)
The latest transaction was for a bungalow on Pearl Island that was sold for $25 million ($2,002 psf), with a caveat lodged in May. Prior to that, a bungalow on Cove Grove fetched $24 million ($2,464 psf). The other three deals were done in January: One was a bungalow on Sandy Island that was sold for $16.8 million ($2,043 psf), with the remaining two, bungalows on Lakeshore View — one was sold for $14 million ($1,198 psf) while the other fetched $10 million ($1,414 psf).
Word around the cove is that there were about eight or nine deals that were done even though they were not reflected in the caveats lodged. These are said to be purchases by Chinese nationals. As foreigners, they had to pay a 24% buyer’s stamp duty on their purchases.
“I believe values at Sentosa Cove have fallen sharply from the frothy $3,000 psf level in the 2010–2011 period,” says List Sotheby’s Tay. “Prices are just starting to find a new equilibrium. This time, they are driven by owner occupier demand, unlike speculative demand in the past.” He believes sales momentum in Sentosa Cove has just started to pick up. Prices remain attractive compared to some of the 99-year leasehold offerings on the mainland, he adds.
Bungalow Transactions in Sentosa Cove - EDGEPROP Singapore
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