While sales decline, high-end properties continue to attract attention amid market uncertainties.
SINGAPORE: The sale of Good Class Bungalows (GCBs) in Singapore saw a historic low in 2023, reflecting a significant downturn in the luxury property market. However, Han Huan Mei, research director at List Sotheby’s International Realty, suggests that while the market may be “down,” it is far from “out.”
Many potential buyers are staying on the sidelines, hoping for price reductions from sellers. For many Singaporeans, owning a bungalow represents prestige and plays a key role in long-term legacy planning. These spacious homes, often sitting on large plots of land, are a rare commodity in the land-scarce city-state, with just 5% of the population residing in landed properties.
Data from the Urban Redevelopment Authority (URA) reveals that annual sales of landed properties fluctuated between 1,300 and 1,800 units from 2019 to 2023. The highest surge in demand occurred in 2021, with 3,080 units sold, as the pandemic drove people to seek larger living spaces for remote work and learning.
However, the number of landed homes sold in 2023 dropped to just 1,268 units, down from 1,681 in 2022. Despite the drop in volume, prices continued to climb, with detached house prices rising by 8.4% to S$1,699 per square foot (psf), semi-detached homes increasing by 12.4% to S$1,678 psf, and terrace houses seeing a 9.4% rise to S$1,888 psf.
In the exclusive Good Class Bungalow Areas, which are known for their astronomical prices, only 18 GCB transactions were recorded in 2023—marking the lowest sales volume since 1996. Luxury properties have faced headwinds, including global economic uncertainties, rising interest rates, and local cooling measures. Buyers have become more discerning, with many holding back due to what they perceive as “too high” asking prices. The general sentiment is that unless a property meets all the right criteria, including location, design, and plot size, buyers are unwilling to pay a premium.
Despite the overall decline in transactions, there have been notable high-value deals. For instance, the Fangiono family, a key player in Singapore’s palm oil industry, purchased three GCBs for S$206.7 million. Such transactions suggest that there is still interest in prime real estate, even amidst a downturn.
However, the market faced challenges in the second half of 2023, particularly following a high-profile money-laundering bust in August. The fallout from this scandal led to vacant luxury properties, with landlords struggling to secure tenants, some of whom had to reduce rental prices by up to 30% due to the stigma surrounding the market.
Looking ahead, uncertainties remain over the bungalow market’s performance in 2024. The introduction of higher property taxes, along with ongoing geopolitical tensions, continues to cast a shadow over future demand. Nevertheless, optimism persists among potential buyers who are hoping for price adjustments to make prime real estate more accessible.
