How has the pandemic affected landed home buyers’ property-buying decision?

6 min read

Good Class Bungalows (GCBs) have made the news around a week ago. This time, a bungalow at Cluny Hill was sold for a record S$4,291 psf. With a land area of 14,843 sq ft, the property was sold for S$63.7 million.

Artist's impression of the side view of the Cluny Hill bungalow
Artist’s impression of the front view of the Cluny Hill bungalow. Source: Wallflower Architect and Light Collab

Not much is known about the buyer, except that he’s a local tech entrepreneur in his thirties who recently sold a start-up. According to a HardwareZone user and Business Times, the buyer could potentially be Tommy Ong, founder of Stamped.io, which provides customer reviews and loyalty programmes management software. Ong recently sold the company to Canada-listed WeCommerce Holdings for up to US$110 million in March.

Nevertheless, the record S$4,291 psf exceeds the previous record of S$4,005 psf set earlier in March when a Nassim Road bungalow was sold. Bought for S$128.8 million by Jin Xiao Qun, the wife of Nanofilm Technologies International founder and executive chairman Shi Xu, the house has a land area of 32,159 sq ft.

Since the start of this year, prices of properties in the GCB areas have generally been increasing, especially in areas near Botanic Gardens like Nassim, Cluny and Tanglin.

What’s driving the high price of Good Class Bungalows? 

Bungalows in GCB areas generally fetch a high price due to their scarcity. In land-scarce Singapore, GCBs typically have a land area of at least 15,000 sq ft or 1,400 sqm. There are also some below 1,400 sqm.

On top of that, they’re located in only 39 gazetted areas. They come with strict planning conditions to preserve their exclusivity and low-rise characteristics. Currently, there are only an estimated 2,800 GCB land plots here.

Besides scarcity, experts have pointed out the lack of new bungalows, especially near Botanic Gardens, and the low-interest-rate environment may have caused the recent spike.

At the same time, GCB buyers have high liquidity. They’re usually the real Crazy Rich Asians — wealthy local families buying for their children or grandchildren. They may also be the new rich who have benefited from a recent IPO or sold their company, just like the Cluny Hill bungalow buyer. Some are also new citizens drawn to Singapore’s overall stability and handling of the pandemic.

Whichever the profile, their businesses have done well during the pandemic. In times of crises, they have holding power. So properties in GCB areas have been doing well over the years.

In fact, from 2001 to 2021, land prices for GCBs have been rising at a compounded average growth rate (CAGR) of 7.5% per annum. In comparison, landed properties and non-landed properties have a (CAGR) of 3.7% and 3.3%, respectively.

Despite the pandemic, there were 40 transactions in GCB areas with a total value of S$892.99 million last year. This is actually higher than the total value of S$782.02 million for the same number of transactions in 2019.

How about the Cluny Hill bungalow? 

According to Bruce Lye, co-founder of SRI, who brokered the Cluny Hill deal, scarcity, the present momentum of sales in the GCB market and the locale of the plot itself may have prompted the record price.

Additionally, the bungalow is designed by the award-winning and much sought-after architect Robin Tan of Wallflower. The developer, Meir Homes, will incorporate high-quality imported fixtures and fittings and intricate details into the home.

Artist's impression of the front view of the Cluny Hill bungalow
Artist’s impression of the front view of the Cluny Hill bungalow. Source: Wallflower Architect and Light Collab

How has the pandemic affected the buying patterns for landed homes and GCBs over the past year? 

Like most property buyers these days, many high-net-worth individuals (HNWI) realise they need more space, whether it’s a work area, a play area for the children to relax or a nice lawn or garden.

“(It’s) very essential to have a proper work area, maybe even two work areas. You can’t do a work Zoom concurrently whilst your spouse is also Zooming in the same room!” adds Bruce.

At the same time, buyers are now more open to virtual viewings, saving a lot of time and minimising physical contact. In fact, Bruce managed to close a deal after just one virtual viewing.

A larger inflow of liquidity and cheap financing options caused by the pandemic have also spurred larger purchases across the board.

“More importantly, for many HNWIs, having money in the bank with nowhere to travel and spend makes them rethink their priorities in life.”

Cluny Hill property is still under construction

What’s interesting about the record-breaking Cluny Hill transaction is that the property is still under construction. Spanning two levels plus a basement and an attic, the bungalow will have six bedrooms and a swimming pool. It’s expected to be completed in Q3 2022.

The property is currently being built by the Soh family of Meir Homes, who were the sellers of the house. They initially intended it to be their family home and had received many unsolicited offers in the past. But they felt the buyer’s genuine interest and “a favourable structure of the deal” led to the sale.

The 2 Cluny Hill site under construction a while back. Source: Google Street View

In fact, according to Bruce, buying smaller bungalows and semi-detached houses in prime locations during the construction stage has been a common trend over the past 1.5 years.

“An uncompleted home gives the buyer an opportunity to do some minor tweaks in the plans to suit them better, without going through the hassle of starting everything from scratch.”

The planning, submissions and approvals alone take around one year. If everything goes according to plan (i.e. no delays due to Covid-19), construction will take around two years.

Given the construction delays due to the pandemic, building a landed home from scratch will entail a longer wait. So it may actually be better to buy one in the middle of construction to cut down the waiting time.

As for this Cluny Hill property, the buyer was looking for a regular land plot and a new house facing or located close to greenery. With this GCB matching his requirements, we’re sure this is one dream catch he will cherish for years to come. With prices continuing to mount for GCBs, history has shown that a record price today, could possibly be a steal tomorrow.

If you found this article helpful, 99.co recommends What’s the big deal about Good Class Bungalows in Singapore? and Ultra-high-net-worth individuals who bought or sold bungalows or entire property blocks in Singapore recently

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