ST : Bought: $20m in June 2009 Sold: $37m in Oct 2009

Nov 10, 2010

Bought: $20m in June 2009 Sold: $37m in Oct 2009

Good-class bungalows are changing hands at a fast clip as prices soar

By Esther Teo




The owner sold this 40,677 sq ft good-class bungalow on Ridout Road four months after buying it, making a handsome profit of $17 million. -- PHOTO: GOOGLE.COM

GOOD-CLASS bungalow owners are cashing in on rocketing property prices.

A CB Richard Ellis (CBRE) analysis of Urban Redevelopment Authority (URA) Realis caveats shows that good-class bungalows are netting bumper profits for owners who have seen average per sq ft (psf) prices rise almost 30 per cent over the past year.

Several have taken to buying and selling their good-class bungalows within a period of less than two years.

At least seven good-class bungalows bought since May last year have been sold within 18 months of purchase, with four sold within a year, with a profit of as much as 85 per cent over the purchase price.

This massive gain was seen by a 40,677 sq ft good-class bungalow property on Ridout Road near the Holland area, translating to a $17 million gain within a four-month span.

At least one home, on Nassim Road, has even been sold five times within the past six years - soaring from $9.8 million in 2005 to $43.5 million this year.

It sold at $1,800 psf in April this year - almost 4.5 times the $405 psf it was sold for in February 2005. The 24,186 sq ft property had changed hands at $620 psf in August 2006, $760 psf in December the same year, followed by $1,000 psf in June 2007.

Experts said that good-class bungalows have turned out to be one of this year's star investment propositions.

URA data shows that non-landed home prices inched up 1.6 per cent in the third quarter, while prices of detached homes rose 8.4 per cent over the same period.

CBRE said that while the 109 good-class bungalow sales last year had been transacted at $831 psf on average, the 86 transactions this year to September, which totalled $1.6 billion, were done at an average of $1,055 psf - a 27 per cent surge over the previous year.

This increase is one of the steepest over the last 15 years, said Cushman and Wakefield's senior manager of Asia-Pacific research, Mr Ong Kah Seng.

He noted that the keen buying interest in good-class bungalows was being driven by limited supply, making it the safest buy for a home buyer not limited by affordability.

'(Even with) developers' concerted efforts to brand condominiums with innovative concepts, the product is fairly homogeneous...On the other hand, buyers of good-class bungalows, in addition to being proud owners of the land, will be able to highly customise their homes to be materially different from another,' he said.

Mr Douglas Wong, CBRE director of luxury homes, said that the approximately 2,400 good-class bungalows, which can be found in 39 prime gazetted areas such as Nassim, Dalvey and Tanglin, are owned by only about 1,000 individuals.

These owners are usually ultra-high net worth Singaporeans, who are mostly professionals, businessmen or entrepreneurs, he said.

'Many of the buyers might have purchased their homes with the intention of long-term investment, but when the market moves, they might seize the opportunity to make some profits instead,' he added.

Mr Alexs Chua, managing director of property agency AC MacGyver, a specialist in landed homes, said that about 20 per cent of homes sold last year have been put on the market again, although many owners may just be testing the market.

He expects prices to rise another 10 per cent by March next year.

But CBRE's Mr Wong reports that demand had slowed in the third quarter, when 19 good-class bungalows were sold compared to 36 in the second quarter and 31 in the first quarter.

'This could be attributed partly to cautious sentiments and partly to the widening price gap between good-class bungalow owners' expectations and buyers' offers,' he said.

However, he expects the market to achieve about 100 to 120 transactions amounting to about $1.8 billion this year.

Typically, only Singapore citizens can own a good-class bungalow, but permanent residents may obtain permission to buy small bungalows with land areas of about 15,000 sq ft.

esthert@sph.com.sg