Bungalow deals turbo-charged by new generation of business titans

/ EdgeProp Singapore |
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SINGAPORE (EDGEPROP) - Making its debut in the bungalow market is real estate investment firm The Land Managers, founded by Andy Lim, the son of co-founder and group CEO of ARA Asset Management John Lim. The Land Managers forked out $18.1 million ($1,401 psf) for a 12,906 sq ft, freehold bungalow site at 12A Broadrick Road, off Mountbatten Road in prime District 15 of East Coast. (See also: Ten-bedroom bungalow at Lewis Road on sale for $16.8 mil)
The plan is to redevelop the site and build a pair of smaller bungalows which will then be sold, says William Wong, managing director of landed property agency, Realstar Premier Group, who brokered the sale.
Just last September, the adjacent freehold bungalow plot, which is larger at 16,150 sq ft, changed hands for $19 million ($1,176 psf). On a psf basis, that means prices have jumped 19% in just a space of eight months. The deal was likewise brokered by Realstar Premier.
“Indeed, the price psf for the landed property market has surpassed the last peak in 2013,” says Wong.
Source: List Sotheby's International Realty

Outstripping previous peaks

Average prices of bungalow transactions across Singapore, including Sentosa Cove, have reached a new high of $1,433 psf, outstripping the previous record of $1,367 psf in 2013, according to research by List Sotheby’s International Realty based on transactions from 2010 to May 20, 2021. And this is even after Good Class Bungalows (GCBs) were excluded.
In the GCB market alone, average prices are now at $1,653 psf, based on 41 transactions with caveats lodged as at May 20, according to List Sotheby’s director of research, Han Huan Mei. It has even exceeded the previous peak of $1,535 psf in 2018, she adds.
The price increase has been most pronounced in the most coveted prime GCB estates — the likes of Nassim Road, Cluny Road-Cluny Hill, Dalvey Estate and Tanglin area — where prices have already surged 20% since the pre-Covid period in January 2020, according to Realstar’s Wong.
Wong anticipates average prime GCB land prices to hit $2,500 psf within the next year. Prices of non-prime GCBs have increased too, but at a slower pace of about 15% compared to a year earlier, he notes.
The GCB deals this year are also bigger: There are more deals above $40 million this year than in any of the past 11 years. Most of the deals are concentrated in the prized neighbourhoods of Nassim, Cluny, Dalvey Estate, Chatsworth Park and Leedon Park, notes Steve Tay, senior associate vice president of List Sotheby’s.
Tay also expects to see more “outsized deals above $80 million” in the coming years. For a GCB sitting on a land area of 15,000 sq ft, the price of $80 million will translate to $5,333 psf. In the Nassim area, a GCB of that size is already asking for $90 million ($6,000 psf). If such psf prices are achieved, they will certainly set a new benchmark in the GCB market. “But it doesn’t sound far-fetched as such prices have already been achieved for penthouses in the prime areas,” Tay points out.

The notables

GCB transacted prices in the Nassim and Cluny area have already crossed $4,000 psf. In March, an old GCB on Nassim Road was purchased for $218 million or a record $4,005 psf by Jin Xiao Qun, the wife of Nanofilm Technologies International founder and CEO Shi Xu.
The GCB at Grange Road that was purchased by real estate magnate Kishin RK for $48 million (Photo: Samuel Isaac Chua/EdgeProp Singapore)
The recent sale of 2 Cluny Hill was yet another record price on a psf basis when it changed hands for $4,291 psf. The GCB is still under construction and likely to be completed only in 3Q2022. The buyer who paid $63.7 million for the GCB is tech entrepreneur Tommy Ong, who is in his 30s. He is the founder of Shopify review app, Stamped.io, which was sold for US$110 million ($145.86 million) in March.
Meanwhile, 37-year-old real estate magnate Kishin RK quietly purchased an old GCB on Grange Road from the Goh family that founded both NatSteel and Tat Lee Bank Group. Kishin paid $48 million ($1,697 psf) for the GCB in a deal brokered by Realstar. Kishin is said to be looking for a “star architect” to design his new GCB. The plan is to redevelop the property and reorientate it to face Chatsworth Road, and to adopt that address too.
The young billionaire had sold one of his investment properties, an 8,740 sq ft penthouse at Ardmore Park, for $27.65 million ($3,163 psf) last year. Kishin was said to be on the hunt for a GCB since.
The GCB at Swettenham Close purchased by Ben Chng, CEO of Viz Branz Holdings, for $48 million earlier this year (Photo: Samuel Isaac Chua/EdgeProp SIngapore)
Another GCB that was snapped up for $48 million earlier this year is at Swettenham Close. It was a relatively new GCB sitting on a 16,594 sq ft, freehold site. Hence, the price worked out to $2,893 psf. The deal was said to have been brokered by KH Tan of Newsman Realty. The buyer was Ben Chng, CEO of Viz Branz Holdings, a manufacturer and distributor of instant cereal and beverages under the brands of Gold Roast and Café 21, founded by his family in 1988. Last November, Bahrain-based investment group Investcorp had purchased a majority stake in Viz Branz from Chng.
At Astrid Hill, a GCB shielded from view by a long driveway, changed hands for $44.3 million ($1,413 psf) in May. The GCB sits on a freehold land area of 31,359 sq ft. The buyer is believed to be Ng Keng Sing, a director of petroleum company Midas NSSG International and former CEO of TAT Petroleum.

New entrants

What is driving this incessant buying wave at the very top-end of the residential market? “The recent buyers are mainly the new multimillionaires in the finance, trading, tech and pharmaceutical sectors; and they are generally younger, in the 30s to 40s age group,” observes List Sotheby’s Tay. “There are more naturalised citizens buying for their own family use as well.”
The GCB at Astrid Hill sitting on a sizeable land area of 31,359 sq ft that was recently sold for $44.3 million ($1,413 psf) [Photo: Samuel Isaac Chua/EdgeProp SIngapore]
But it is not just the tycoons and the typical development firms that are buying, says Realstar’s Wong. “Interest is coming from family offices and fund management firms too,” he adds.
Landed property developers can still expect a 15% to 20% return on investment (ROI), despite the higher construction costs brought on by Covid disruption to both materials and foreign workforce, according to Wong. “Construction cost is now at an all-time high,” he adds. “The cost will eventually be passed on to the buyer in the form of higher sale prices for bungalows.”
The perennial shortage in terms of supply of new landed homes is another reason that prices have been driven up by the spike in demand, notes Wong. “Demand is higher as more buyers crave bigger space due to the current pandemic,” he adds. “This is despite the rising construction cost.”
Based on URA data, the stock of terraced houses stood at 40,132 units as at end-1Q2021. Semi-detached houses, on the other hand, make up 22,268 units in the overall housing market. Detached houses account for just 10,855 units as at end-1Q2021. And GCBs are said to make up just 2,500 to 2,600 out of the total stock of detached houses, estimates List Sotheby’s Tay.
The GCB at East Sussex Lane sitting on a land area of 27,181 sq ft that changed hands for $29 million ($1,067 psf) [Photo: Samuel Isaac Chua/EdgeProp Singapore]

Widening price gap

Some of the significant GCB deals brokered by Realstar this year include a recent sale of a GCB at East Sussex Lane sitting on a land area of 27,181 sq ft that changed hands for $29 million ($1,067 psf); another GCB at Victoria Park Close that fetched $28.328 million ($1,857 psf); and a GCB at Ford Avenue that went for $26.5 million ($1,666 psf) in March this year. At Yarwood Avenue, a GCB sitting on a 18,911 sq ft site changed hands for $23.1 million ($1,222 psf).
Meanwhile, List Sotheby’s Tay has brokered over $200 million in luxury bungalow deals, including those in Sentosa Cove, in just the first five months of 2021. He is marketing several GCBs at Coronation Road West and King Albert Park. He sees GCB interest extending to in the Bukit Timah and Holland Road area, as well as King Albert Park, a standalone GCB enclave in District 21. These neighbourhoods are surrounded by amenities such as MRT stations, the Rail Corridor, malls, eateries and top schools. Hence, they are sought-after, says Tay.
Last year’s enforced “circuit breaker” and the ongoing restrictions to curb the spread of Covid have heightened the awareness of the fragility of life, as well as the importance of striking a balance between business building, wealth creation and strengthening family ties, notes Tay. “The purpose of wealth creation is to enhance one’s quality of life, and that of the family,” he adds. “And Covid-19 has really brought home that message to the ultra-rich.”

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