The allure of Singapore’s good class bungalows

Singapore’s good class bungalow market continues to draw in wealthy buyers. The market outlook remains positive.

April 22, 2022

Singapore’s good class bungalow (GCB) market yielded impressive results in 2021. Notwithstanding the ongoing pandemic, sales soared above the pre-pandemic level and market performance exceeded expectations. The total transacted value rose to new heights as deals worth SGD 2.63 billion were transacted during the year, surpassing SGD 2.34 billion registered in 2010. The year also witnessed a few record-smashing transactions, including a new land rate of SGD 4,291 per sq ft for a bungalow under development in Cluny Hill.

Figure 1: GCB Transacted price and sales volume (2000-2021)

The allure of Good Class Bungalows

Located at the top of the housing pinnacle in Singapore, GCBs are highly exclusive and have the ability to retain value over time. They are largely perceived as wealth-preservation assets that enjoy long-term capital appreciation and act as a hedge against inflation. These positive attributes of GCBs continue to attract wealthy buyers to the market, as many locals aspire to own a GCB in their lifetime.

Representing less than 1% of the housing stock in Singapore, GCBs are limited in supply. There are less than 3,000 GCBs that exist and can be found in 39 gazetted GCB areas. Intuitively, new supply in this market is scarce.

That said, a major GCB project currently in the pipeline could consist of at least 15 leasehold units to be developed on the Former Caldecott Broadcast Centre.[1] This will be an exceptional launch, and being a unicorn project, it will inject new supply into a scarce market.

Expectations in 2022

Last year ended with cooling measures kicking in towards the second half of December. These included raised Additional Buyer’s Stamp Duty (ABSD) rates, lowered Total Debt Servicing Ratio (TDSR) threshold and tightened Loan-to-Value (LTV) limits for HDB Housing Grants. In addition, the recent Budget 2022 also announced a property tax hike for residential properties, which is set to take place over two phases in 2023 and 2024.

However, these measures are not expected to hinder GCB sales or serve as a major deterrence. As most buyers typically ensure that their GCB purchase is counted as their only residential property, they are not subject to the ABSD. Besides, these buyers are likely from high-income households and can absorb the raised taxes. Most importantly, the perceived benefits of owning a GCB can anytime outweigh the additional outgoing payables.

Table 1: GCB deals in 2022 YTD*

No. Sale Date Address Land Area (sq ft) Sale Price (SGD million) Land Rate (SGD per sq ft)
1 Jan-2022 Lornie Road 25,272 $24.8 $981
2 Jan-2022 Cassia Drive 9,973 $22.0 $2,206
3 Jan-2022 Garlick Avenue 12,778 $19.0 $1,487
4 Feb-2022 Namly Hill 11,087 $24.8 $2,237
5 Feb-2022 Garlick Avenue 15,137 $29.9 $1,974
6 Feb-2022 Oriole Crescent 9,962 $17.1 $1,717
7 Feb-2022 Kingsmead Road 6,310 $14.5 $2,298
8 Feb-2022 Oriole Crescent 10,300 $24.1 $2,340
9 Feb-2022 Jervois Hill 15,094 $58.9 $3,902
10 Mar-2022 Chancery Lane 34,216 $66.1 $1,932
11 Mar-2022 Oriole Crescent 10,600 $22.0 $2,075

*Caveats updated as of 25 March 2022

Source: URA Realis, JLL Research

There have already been 11 GCB deals concluded in 2022 thus far, and sales performance remains strong. Despite the cooling measures, prices are on an uptrend, as average GCB land rates rose quarter-on-quarter. Notably, all the GCB transactions this year are located in prime districts, which attests to the strong interest in prime GCB properties.

Market sentiment is likely to remain positive for GCBs, and prices could continue to rise. Though unlikely to be on par with 2021’s performance, we could expect to see a moderately healthy GCB market in 2022.