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SG GCB market bracing for another sluggish year

Property Here - Friday, September 27, 2013

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You know the cooling measures are working when even the wealthy put off buying luxury homes. One such example is the good class bungalow (GCB) market which is expected to see a slowdown in sales activity this year. 

By definition, these properties have a minimum land plot size of 1,400 sq m (15,070 sq ft) and building height of two-storeys only. Location-wise, they are limited to areas within Districts 10, 11, 20, 21 and 23. 


CBRE’s Head of Luxury Homes Douglas Wong, who specialises in GCBs, told The PropertyGuru that he expects a total of 40 to 45 such bungalows to be sold in 2013 with a transaction value in the region of S$850 million – S$950 million. This is notably lower than the sales volume in 2012 which saw 54 deals done amounting to a stunning S$1.17 billion. 

“GCB buyers, most of whom own more than one property, will need to fork out more cash and include the Additional Buyer’s Stamp Duty (ABSD) as part of the acquisition costs,” said Wong.  

He noted that on top of the standard three percent stamp duty, buyers now have to pay an additional stamp duty of seven percent if it is the second property they are purchasing or 10 percent for the third and subsequent property.   

“Moreover, the loan-to-value will also be pegged at 50 percent for the second property purchase and 40 percent for the third and subsequent purchase,” Wong added.  

This would mean that the upfront cash payment required including down payment could be around 70 percent of the price of a GCB. For instance, to buy a GCB which costs S$25 million, a buyer must be prepared to pay around S$18 million in cash upfront before he or she can take up a loan to pay the remaining amount.  

As a result, Wong said that potential buyers will be unable to commit to purchases as quickly as before and they will be more selective of what they buy.  

“Under the present restrictive financing environment, we expect most of the GCB buyers to be end-users or very long-term investors. It is possible that some investors may be side-lined while others will look for alternative investments outside the residential sector, or beyond the shores of Singapore.”  

But while the new loan curbs have contributed to depressing bungalow sales, prices on the other hand have remained fairly resilient.  


According to a CBRE report, 20 GCBs were sold at an average price of S$1,403 psf in the first half of 2013, similar to S$1,405 psf for the whole of last year, and this trend is expected to continue in the short term.  

In fact, the two new bungalows at Holland Park that are being developed by Frasers Centrepoint Homes have asking prices of between S$35 million and S$38 million – well above S$2,300 on a per square foot basis, the report added. The properties each comprise four bedrooms and a guest room.  

This begs the question: If the measures have reduced the purchasing power of some buyers, why are prices holding strong?  

Part of the answer lies in the sheer size of these homes which make them a prized asset in land scarce Singapore. CBRE’s Wong also said: “There is very limited supply of GCBs in centrally located areas (there are only around 2,500 GCBs in the whole country today). The unique charm and resort style of the property appeals to the niche and discerning home buyer.”  

Although nobody is predicting a recovery in sales anytime soon, experts continue to have a stubbornly optimistic outlook. The report noted that the GCB market can still count on seasoned buyers who see the long term value of such properties to remain actively buying into the luxury residential market.  

Time will tell if this is the case.


Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email