Source : The Edge – 16 May 2009
With market sentiment improving, transaction activity has picked up and bungalow owners, particularly those of GCBs, are readjusting prices upwards. They are turning to top bungalow specialists to achieve their target prices.
WITH THE STOCK market recovering and the benchmark Straits Times Index gaining 17.7% since April 28 and 46% since its low on March 9, sentiment in the property market has also improved markedly. All this has translated into a pick-up in transaction volume in the bungalow segment, and even renewed interest in the Good Class Bungalow segment in the past two weeks.
Marketing agent and bungalow specialist K H Tan, 46, is pushing the envelope on GCB sales. A fortnight ago, he persuaded the owner of an original 1960s bungalow perched on a hilltop with a long, winding driveway at 2 Swettenham Road that his property was worth $1,000 psf. Thus, the single-storey bungalow, which sits on a freehold land area of 33,293 sq ft, has a guide price of $33 million.
A property-title search found that the house belongs to George Quek, founder and chairman of BreadTalk, and his wife, Katherine Lee. A caveat lodged with URA Realis last July showed that the purchase price was $27 million, or $811 psf. Today, the indicative price is $1,000 psf.
Tan, the marketing agent, has been a specialist in the marketing and selling of GCBs for the last five years and brokered many of the high-profile bungalow transactions in the $20 million range. “I’m quite selective about the bungalows I sell,” he says.
The largest GCB transaction Tan has ever done was that of a bungalow at Victoria Park, which has a freehold land area of 32,077 sq ft. It was sold for $29.5 million, or $920 psf, in mid-2007 at the peak of the property boom. That was a record high in the GCB segment in terms of quantum price. He also brokered the sale of niche developer George Lim’s two newly built luxury GCBs — Nos 37 and 39 Leedon Road — which were sold for $25 million and $27.5 million respectively last year. He is now the marketing agent for Lim’s bungalow at 6 Leedon Park, which has an indicative price of $21 million.
Not the typical property agent decked out in a smart suit or shirt and tie, Tan has not worn a tie in 15 years. Instead, he wears a necklace with a jade Kuan Yin pendant.
Tan attributes his success to his intuition, or what he calls his “sixth sense in predicting the property market accurately”. An early riser, he wakes up at 4.30 every morning and, by 5am, he is already at the Botanic Gardens for his one-hour walk. “It’s during these walks that I get some of my best ideas for marketing a property or on bungalow designs for my clients,” he says.
Tan is not opening the sale of the house at 2 Swettenham Road to just anyone who can afford it, but is pre-selecting 30 prospective clients whom he intends to invite to view the property and to participate in a closed tender for the GCB on June 18. His criteria are based on not just a client’s net worth and prominence but also on whether the individual is a philanthropist. Tan, who is also managing director of Newsman Realty, says he has already received a dozen offers from those who have viewed the property.
He wants to link the sale of the bungalow to a charity drive to raise funds for the KK Hospital Health Endowment Fund. He is also looking at charging a $1,000 fee for each tender document, and all proceeds from the sale will go to the fund. On top of that, both the owner and Tan have agreed to a target price, and anything beyond that amount will be donated to the fund. Tan is also pledging a portion of his commission from the sale towards the fund.
The other reason for pre-selecting prospective buyers for the Swettenham Road bungalow is that Tan hopes the new buyer will retain the façade of the original 1960s house. The current property has a total built-up area of just 3,400 sq ft, comprising a main house with three bedrooms, and a study attached to the master bedroom. A separate, smaller building, used as a guest house, has a bedroom and a living room. If the new owner wants to add more bedrooms to the house, there is room for a new extension at the back, which can bring the total built-up area to 5,000 sq ft if maintained as a single-storey bungalow, adds Tan. The idea is to ensure that the façade of the new extension is consistent with the design of the existing property.
TRANSACTIONS UP, ASKING PRICES BACK TO EARLY 2OO7 LEVELS?
Transactions in the GCB market, which had languished for much of the year, have also picked up in recent weeks as sentiment turned more positive. Just last week, Tan handled the sale of a GCB in Binjai Park, with a freehold land area of 22,000 sq ft, for $19.8 million. A GCB in Cluny Hill with a freehold land area of 37,039 sq ft recently received an offer of $30 million, but the owner turned it down as he intends to tear down the existing bungalow and build a mansion on the sprawling site. According to caveats lodged with URA Realis, the property had changed hands three times in the last two years. The first was in January 2007 for $15 million, the second was in June that year for $20.2 million, and the third time was in May last year, when it was resold for $21.5 million. Another bungalow with a 19,000 sq ft freehold area at Cluny Hill was also said to have changed hands a week or two ago for $17.67 million, or $930 psf, according to sources.
At Jervois Road, a GCB with a land area of 15,070 sq ft was reportedly sold for an undisclosed amount. The last time the property changed hands was in 2004, for $8.45 million, or $561 psf. Over at Jalan Bahasa, a row of new three-storey detached homes has also been put on the market. The developer is said to be niche luxury bungalow developer Satinder Garcha of Elevation Developments. One of the bungalows at Jalan Bahasa, with a land area of 4,308 sq ft and built-up area of 5,300 sq ft, was recently sold for $5.8 million and another for $6.5 million. According to market sources, a GCB at Astrid Hill with a land area of 21,119 sq ft and which changed hands last year for $13.8 million was recently sold for $13 million.
Tan is also marketing Elevation’s brand-new GCB at 8E Gallop Road, which has a total builtup area of 9,000 sq ft and freehold land area of 16,000 sq ft. The newly completed bungalow has six bedrooms and an entertainment room. The owner, who has received five offers so far, ranging from $16 million to $18.5 million, is said to be holding to the asking price of $19 million to $20 million.
A new benchmark price for top-end GCBs could be set if Tan successfully concludes the sale of GCBs with price tags above $30 million. Apart from 2 Swettenham, Tan is also the marketing agent for a GCB in Cluny Park. The bungalow has a large freehold land area of 37,000 sq ft and the owner has an indicative price of $39 million. The owner recently received an offer of $33 million, but he has turned it down and is sticking to his asking price.
Other bungalow specialists have also noted a pick-up in sentiment and activity. What is clear is that sellers have also revised their asking prices upwards. “This week, every owner has raised his price,” says Michael French, managing director of Asia Premier Property Consultants. “I’ve an SMS here,” he adds, pointing to his mobile phone. “The owner’s asking price has jumped from $13 million to $17 million. The stock market has risen 300 to 400 points but fundamentals haven’t changed. But suddenly, everyone has this kind of money to buy?”
Sentiment has certainly turned positive, though. French says the landed-home segment — from terraced houses to small bungalows with land parcels of up to 10,000 sq ft — has been buzzing in the past fortnight. “Buyers have been queuing up to give agents cheques,” he says. Why? “Because they are afraid if they don’t buy now, prices will go up further next quarter.”
French reckons that the pick-up in activity is sustainable, but his only fear is that it may get derailed by an unexpected event. So far, the STI has shrugged off fears over the swine flu, and both the stock and property markets have chugged along. “In 4Q1999 to 1Q2000, the market was in a bull run,” recalls French. “But after the tech stock bubble burst in March 2000, the Singapore [property] market sank and never quite recovered [until three years ago]. This could be repeated because fundamentals are absent even as people talk about the ‘green shoots’ of economic recovery.”
Called “the bungalow king” by a newspaper in 2000, French, who was born in Singapore to British parents, has adopted the moniker ever since, and even his website address is BungalowKing.net. He has been specialising in the GCB market since 1995, and started with a small property firm called Challenger Properties before moving to Chesterton International. “There was a joke going around at that time, and they used to say, ‘When Michael French walks into Chesterton, the whole building shakes,’” he says. “I don’t know whether it was the feng shui or market conditions but, at Chesterton, I was closing almost one GCB sale a month and, I would say, I was the No 1 agent in the whole of Chesterton.” He was there from 1998 to 2000, before he left and set up Asia Premier in 2000.
‘DOG-EAT-DOG WORLD’
With the improved market sentiment and pickup in activity, agents are also increasingly seeing other agents jumping in even after the option agreement on a property has been signed and telling the owner that he or she can get a better price for the GCB. “This is a very common practice in the market,” says French. “The property market is a dog-eat-dog world because the stakes are very high. You do one transaction, there can be $100,000 to $500,000 [in commission] on the table. So, when you’re there, you have to close the deal as quickly as possible, even if you have to get the option signed at midnight or 1am. You must get him to sign [the option].
“[Otherwise], as soon as the owner tells another agent he has an offer, the agent will say, ‘I can bring you half a million or another million dollars more,’ and then the owner will suddenly panic, and everything will be on hold. That’s very common. It’s already started. Agents are now coming in, and every owner is now raising prices.”
William Wong, RealStar Premier Property Consultant’s managing director, has also noticed this phenomenon, which he says is very common especially in a rising market. “So, we always talk about a concrete cheque offer,” he says. “Everybody can tell you what price they can get, but can they get a cheque offer? It’s very common practice in the real-estate industry, especially in the high-end bungalow and GCB segment.”
Since 2004, Wong’s RealStar has been specialising in the landed-housing segment and mainly bungalows in the prime districts of 9, 10 and 11, as well as in the east, in Districts 15 and 16, and the GCBs in Binjai Park and Yarwood area in District 21. Last week, it reported a 40% increase in the number of landed- home transactions in April compared with the previous month. This spike comes on the back of the firm’s sale of semi-detached properties on Boscombe and Warehome Roads in the east in early April. “Within three weeks of the launch, we are left with only two units at Wareham Road, with all four units at Boscome sold out,” says Wong. The most recent transacted price was $3.25 million for a semi-detached house at Boscombe Road.
In the last two months, Wong has also seen the asking price for a bungalow in Cluny Park increase to $15.6 million recently, from $12 million. “Surprisingly, [asking prices] have gone up again, and they’ve gone up earlier than expected,” he says. “It’s good because, over the last couple of months, the number of transactions has also gone up.”
IS THIS TREND SUSTAINABLE?
Wong attributes the rise in prices partly to the recovery in the stock markets. Three to four months ago, the entry level for GCBs was $10 million to $11 million, observes Wong. Buyers are realising that the entry level has increased from $10 million previously, and are now prepared to adjust their offer price to between $11 million and $12 million, he notes. “But sellers are not accepting them yet,” he acknowledges. “Prices are back to levels seen in early 2007. And it’s also starting to happen in the smaller-bungalow segment.”
In Holland Grove, for instance, the owner of an 8,000 sq ft bungalow with an asking price of $6.8 million has received an offer of $6.6 million, which normally would have been accepted, but has turned it down. Wong says: “These days, we will convey to buyers that, from what we understand, a few days ago, the seller’s asking price was this much, but now it may have been adjusted. So, we manage the buyers’ expectations in case they get disappointed when they offer a price, and find that the seller has since adjusted it upwards again. It’s almost like chasing a moving target.”
Most recently, RealStar brokered the sale of a bungalow at Dyson Road with a land area of 9,000 sq ft for $6.8 million. Wong is also marketing a GCB in Leedon Park with a land area of 15,500 sq ft and asking price of $13 million. Another GCB, with a land area of 15,000 sq ft on Dalvey Road, has an asking price of $18 million. “These days, the asking price for GCBs is back to about $1,000 psf,” says Wong. For Wong, the good news is that buyers have also upped their offer prices in tandem with owners’ prices. “I foresee the transaction volume should be pretty good for the next few months,” he adds. “It’s partly due to the stock market.”
Wong has also noticed that medium-sized developers are again on the lookout for redevelopment land — for both landed homes as well as apartments and condominiums.
Newsman’s Tan plans to conquer new territory — Sentosa Cove — in the next six months. He says some developers have already invited him to market their bungalows there. Two years ago, the prices of 99-year leasehold Sentosa Cove bungalow parcels had even exceeded those of freehold GCBs in the traditional prime districts, and Tan believes there is “a high possibility” that it will happen again when the integrated resorts are ready, and the market stabilises. “So, I think Sentosa prices will go up in two years,” he says.
He estimates that, by then, seafront bungalows will command $1,500 to $1,800 psf, while non-seafront bungalows will see prices of $1,200 to $1,300 psf. As for bungalows that face golf courses, such as Elevation Golf Villas, Tan thinks that, given the exclusivity and the fairways facing bungalows with basement parking, bungalows there could command up to $2,000 psf. With that optimism, Tan hopes he will also set new benchmark prices at Sentosa Cove, just like he did in the prime GCB market.
