Renewed interest in luxury homes

February 16, 2015 2:07 PM SGT

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SINGAPORE: More opportunities for buyers are expected this year, as developers and sellers are more willing to offer price discounts, says Samuel Eyo, managing director of Singapore Christie’s Homes.

Anthony Ng is sought after by Singaporean parents for his ability to teach and motivate even the most indifferent students in subjects such as English, Math and Science.

A former school teacher-turned-tutor, Ng has been teaching and operating tuition centres for close to three decades.

What is lesser known about the 65-year-old grandfather of four is his penchant for investing in property.

Like most Singaporeans, Ng’s first property was his marital home, which he purchased jointly with his wife.

It was a three-room HDB flat in Hougang Avenue 7 bought for just $11,000 in the 1970s, and sold for $50,000 five to eight years later.

The Ngs then upsized to a five-room flat for $70,000 in the early 1980s.

When they subsequently sold it in the resale market several years later, it was worth $150,000.

“That was when I decided to save every penny to invest in property,” he says.

Over the years, his purchases have included condominiums, but had predominantly been in landed housing.

About a decade ago, Ng bought his first Good Class Bungalow (GCB), the Rolls-Royce of bungalows, for just $7 million, when the property market was still in the doldrums.

Today, he owns a portfolio of detached houses including GCBs, all of which are held as investments for rental income.

Despite owning so many GCBs, Ng chose not to live in one, preferring to live in one of his smaller detached houses.

‘Luxury property a good hedge’ Ng believes GCBs will continue to hold their value because of their scarcity.

“Money can always depreciate in value,” he reasons.

“But luxury property will always hold its value, and GCBs are the most secure, as people with money will always want to buy a GCB.” Owners such as Ng have propped up prices of GCBs despite the fall in transaction volume over the last two years which took hit from the property cooling measures.

“Businessmen like Ng tend to channel their wealth into real estate, believing it to be a good hedge against inflation,” says Samuel Eyo, newly anointed managing director of Singapore Christie’s Homes.

“When it comes to selling, these property owners tend to hold on to their asking prices because they can afford to do so, and they are well aware of the limited supply.” Eyo joined Singapore Christie’s Homes this month as a partner with Dave Loo, managing director of SQFT Global Properties, which specialises in marketing overseas projects.

Loo secured the franchise for Christie’s towards end-2013.

With Eyo in place, Christie’s will be building its brand in the marketing of top-tier homes in Singapore — from luxury condos to GCBs and waterfront homes in Sentosa Cove.

Prior to joining Christie’s, Eyo spent nine years at Savills Singapore, where he was last director of Prestige Homes, marketing luxury residential property.

Some of the significant GCB deals Eyo handled while at Savills involved a GCB in Victoria Park that sits on a 32,077 sq ft site and was sold for $48 million ($1,496 psf) in 2011; a GCB in Cluny Road that was sold for $33 million ($2,037 psf) in 2011; and a blackand- white GCB in Holland Park that was sold for $28.8 million ($1,894 psf) in 2013.

GCB transaction volume dropped 47% from 2012 to 2013, which saw just 29 properties sold.

Total sales for 2013 was about $682 million, with average GCB prices hovering at $1,338 psf.

Based on caveats downloaded as at Jan 20, GCB transactions for 2014 totalled 28, with sales of more than $626 million and average prices of $1,428 psf.

This means the average price of GCBs sold last year was 6.7% higher than in 2013 even as transaction volume stayed relatively flat, according to CBRE Research.

Of a total of 71,471 landed houses in Singapore, only 10,659 are detached houses, according to URA statistics as at end-3Q2014.

Property agents estimate that there are only 2,400 GCBs in 39 gazetted areas in Singapore.

In contrast, the total stock of non-landed homes (apartments and condos) was 231,039 units as at end-3Q2014.

It is not just condos and apartments that have seen rental rates weaken, though.

GCBs have also been hit by softening rents.

According to Ng, when he purchased his GCB at Gallop Road in 2011, it was leased at a monthly rate of $36,000.

Now that the lease has ended and recognising that rental rates have corrected, he is posting an asking rent of $28,000.

The existing house on Gallop Road was built in 1984, according to URA Realis.

It underwent an upgrade eight years ago, with additions and alterations made by renowned design firm Bedmar and Shi.

The freehold two-storey house, which has a built-up area of 6,500 sq ft and occupies a land area of 15,070 sq ft, has a swimming pool in the backyard.

It was recently put up for sale with a price tag of $29.8 million ($1,977 psf).

The house is being marketed by Christie’s Eyo.

“My preference is to rent it out,” says Ng.

“On the other hand, assuming someone is willing to give me a very good offer of $30 million, I will sell because I’ve in mind a few houses I would like to buy.”

Catch up Farther along Gallop Road, a GCB was the first to change hands in 2015, based on a caveat lodged on Jan 6.

The GCB, also built in 1984, sits on a freehold, 15,339 sq ft site and was sold for $24 million ($1,564 psf).

According to sources, the buyer is believed to be a member of the Kwek family of Hong Leong Group.

The deal was brokered by Newsman Realty’s K H Tan.

Some GCB deals were concluded late in the year as well.

One such transaction was that of an old GCB in Chancery Lane sitting on a freehold site of 23,928 sq ft.

It fetched $25.39 million ($1,061 psf), according to a caveat lodged on Dec 14.

The deal was said to be handled by C S Chong, a DTZ Debenham Tie Leung realtor specialising in GCBs.

“There are a lot of opportunities out there,” says Eyo.

“Owners and developers are more prepared to offer price discounts today.

And such opportunities don’t come by every day.

If you were to wait until the property cooling measures are rolled back, which nobody knows when will happen, the developers and property owners may be less inclined to lower their prices then.

So this is a great time to source for properties.” Eyo is also marketing a bungalow on Dyson Road owned by a prominent Singaporean family.

The 14-bedroom, double-storey detached house has a total built-up area of about 9,000 sq ft and sits on a freehold land site of 17,681 sq ft.

The property has a 30m-wide frontage, covered car porch and swimming pool.

It was built 20 years ago, with the interior designed as four self-contained apartments for an extended family.

The house is now vacant, as the family has moved elsewhere.

Eyo says the site is zoned for a two-storey, mixed-landed housing development.

This means the new owner can tear down the existing bungalow to build up to three smaller bungalows, which is ideal for big families that want to live in the same compound.

The house has an indicative price of $33.6 million ($1,900 psf.) Just across the road, a house sitting on a smaller land area of 13,390 sq ft was sold for $20 million ($1,493 psf) last April.

It was built in 1984 and was the home of an Indonesian family for many years.

‘Stalemate in Sentosa Cove’ Over in Sentosa Cove, a bungalow on Ocean Drive is on the market for $25 million ($3,200 psf).

The 2½-storey house has a built-up area of 10,000 sq ft, with six en-suite bedrooms, a family room and study.

The owner is believed to be a Vietnamese national who purchased it in 2010 for $15.5 million ($1,984 psf), according to a caveat lodged then.

Although furnished, the house has not been lived in for some time.

While foreigners are allowed to purchase landed houses in Sentosa Cove, they can only occupy them and not rent them out.

The house has unobstructed sea views.

According to Eyo, seafront houses in Sentosa Cove are still in high demand.

What is putting off buyers is the prohibitive additional buyer’s stamp duty (ABSD) of 15% for foreigners as well as the currency woes.

Unlike GCBs, the number of bungalow transactions in Sentosa Cove have dropped from 18 in 2013 to just three in 2014.

Total transaction value likewise plunged to $39.5 million in 2014 compared with $366.8 million a year ago, according to CBRE Research.

“There have been so few bungalow transactions in Sentosa Cove because prospective buyers have been too enthusiastic about making low-ball offers,” laments Eyo.

“Some of the offers are so low that even the owners are not taking them seriously.

That’s why there’s a stalemate.” Sentiment regarding the cove has been hit by a spate of forced sales at some of the luxury condos last year, punctuated by the UOB lawsuit against Lippo Group’s subsidiary, Lippo Marina Collection, and seven others earlier this month.

UOB claimed that the developer and the other individuals, including two property agents, conspired to obtain inflated housing loans from the bank for 38 units at Lippo’s 124-unit Marina Collection.

They did not disclose to the bank the substantial furniture vouchers worth as much as $2.4 million, amounting to discounts of 22% to 34% for each unit.

So far, 37 of the 38 units have defaulted.

Other high-end condos in the prime districts have also been hit by mortgagee sales, including The Laurels at Cairnhill, Reflections at Keppel Bay, The Sail and Marina Bay Residences.

Developers have become more amenable to offering discounts, given the current tough market environment.

Word on the street is that developer Hotel Properties Ltd (HPL) is quietly offering up to 15% discount on some of the units at the newly completed luxury condo, Tomlinson Heights.

The freehold project contains 70 units in a 36-storey tower.

Property agents point to the latest sale as an example.

It was that of a 4,004 sq ft, five-bedroom unit on the 32nd floor that fetched $12.38 million ($3,092 psf) last September, according to a caveat lodged.

When the project previewed, two 4,941 sq ft units on the 36th floor were sold for $18 million ($3,643 psf) and $18.3 million ($3,700 psf) in January and June 2011 respectively, points out a property agent.

The $3,700 psf achieved is the highest for the condo so far.

“However, based on current transaction prices of $3,000 to $3,200 psf, Tomlinson Heights presents a compelling buying opportunity, given its prime location and the fact that it’s a brand-new development with large units,” says Christie’s Eyo.

At 8 Napier, a 46-unit luxury condo project on Napier Road, only six units remain unsold, says Kemmy Sim, director of marketing for the developer, Napier Properties.

Two of the remaining units are penthouses: One is a four-bedroom penthouse of 3,972 sq ft with an asking price of $12.8 million ($3,223 psf); the other is a six-bedroom duplex penthouse of 5,909 sq ft with a price tag of $23 million ($3,892 psf).

Another unit at 8 Napier that is on the market is a four-bedroom, 2,777 sq ft unit on the seventh floor, with an asking price of $9.8 million ($3,529 psf).

All units at the 10-storey condo block come with limestone flooring, travertine walls in the living room and hallway, Boffi-designed open kitchen concept with topend Gaggenau appliances (dishwasher, oven and stovetop) as well as a wet kitchen with Bosch appliances.

The 5,909 sq ft penthouse that is on the market for $23 million is undergoing renovation works.

It was rented out for $50,000 a month until end-October last year.

The tenants had rented the penthouse, as their bungalow was being renovated.

They decided to buy the other 5,909 sq ft penthouse for $20.39 million ($3,450 psf) from the developer, according to a caveat lodged in 2013.

The penthouse is said to be tenanted at $42,000 a month.

The asking rent for the other penthouse, which is currently undergoing refurbishment, is still $50,000, although “it’s negotiable”, says Sim.

In 2012, one of the funds under Keppel Land’s fund management arm, Alpha Investment Partners (AIP), purchased 17 units in a bulk sale for $2,800 to $3,000 psf.

All the units were 2,013 sq ft, three-bedroom apartments.

The 17 were part of an original 19 that MGPA (now part of US fund manager BlackRock) had purchased for an average of $3,550 psf in 2007.

According to Sim, three-bedroom units at 8 Napier are being rented out at $15,000 to $16,000 a month.

Meanwhile, the four-bedroom units have average rents of $20,000 to $23,000 a month.

She is optimistic about the market.

“At the turn of the year, there were a lot of viewings [from both prospective buyers and tenants],” she says.

“There seems to be a return of interest in high-end properties.” 8 Napier is one of the newest condos in the neighbourhood.

In the vicinity are Nassim Wood, built in 1998; and the freehold Botanic Gardens Mansion and Botanic Gardens View, both completed in 1970.

The upcoming Napier MRT station on the Thomson-East Coast Line, the proxi mity to Gleneagles Hospital and Medi cal Centre and Botanic Gardens are also some of the attractions for buyers.

“Beyond its location, units at 8 Napier are able to command asking prices above $3,000 psf because of the quality of the product and the finishing,” adds Eyo.

He is confident that luxury property will turn around in 2015, but it is likely to happen in the later part of the year.

Developers of luxury property will be working harder this year to differentiate their projects and offer buyers attractive incentives, says Eyo.

“This will be an extremely interesting year in the luxury resi dential market.”

This article appeared in the City & Country of Issue 661 (Jan 26) of The Edge Singapore.

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