Demand for GCBs is expected to increase next year.
Real estate agents are bullish of the Good Class Bungalow (GCB) segment’s outlook, expecting transaction volumes and prices to increase next year, reported The Business Times (BT).
This comes after the segment ended 2020 on a high note.
KH Tan, a veteran GCB agent and managing director of Newsman Realty, revealed that in the last four months, they registered a pick-up in viewings for GCBs by ultra-high-net-worth (UHNW) foreigners “who have at least one family member that has become a Singapore citizen in the past one and a half years or so”.
Realstar Premier Founder William Wong expects newly-minted citizens to drive GCB demand for the next two years. His agency enjoyed a bumper year as it brokered 16 GCB deals with a total value of $439 million. Of these, seven were co-brokered with other agents, reported BT.
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Wong said GCB sellers have differing views on the market’s direction next year.
“Some sellers will price their properties more realistically to cash out. They may think, for instance, that post-Covid, the reality will set in and the economy may not be so good; so if an offer comes close to what they want, they will exit,” he said as quoted by BT.
Optimistic sellers, on the other hand, still manage to find buyers for GCBs located within prime areas and a large land plot.
Looking ahead, Wong expects GCB transaction volume to increase by around 20% in 2021 compared to this year. URA Realis data downloaded on 22 December showed that year-to-date tally stands at 40 transactions, which is similar to last year’s figure.
Lewis Cha, Executive Director at List Sotheby’s International Realty (List SIR), also expects an increase in GCB deals next year.
“There are still bungalow seekers who are actively viewing properties. Although the economy is not out of the woods, market sentiment has improved as some industries – pharmaceuticals, e-commerce, tech and telcos – have done well and the stock market has recovered some lost ground,” he said as quoted by BT.
While the number of GCB deals to-date is similar to that of last year, the total transaction volume is higher by 14% at $893 million as prices appreciated.
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Wong said buyers are willing to acquire older properties for redevelopment, considering the scarcity of brand-new GCBs in prime areas. “Some of the GCBs in the prime locations are hitting around $2,000 per sq ft (psf) for land alone,” he said.
The trend of higher prices may continue into the first quarter of 2021. This is because some options to purchase GCBs at high prices that were granted in the fourth quarter of 2020 are yet to be exercised. For instance, Realstar has four existing deals with options that would be exercised by 2021.
With this, Wong expects GCB prices in prime areas like Dalvey, Cluny, Tanglin and Chatsworth to increase by up to 7% next year, following a 5% to 7% hike this year.
“In the not-so-prime areas such as Brizay Park, Old Holland Road, the Binjai and Yarwood areas, prices are likely to rise 3-5% in 2021 after going up 2-3% this year.”
Meanwhile, GCB prices within ultra-prime locations like Nassim and near the Botanic Gardens are expected to climb by 10% to 15% in 2021, following a 10% hike this year, said Tan.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email firstname.lastname@example.org