Buying a GCB for the wealthy may seem like a great idea, but you can use your money in other ways
On Singapore’s pricey private property market, the detached homes located in Good Class Bungalow areas (GCBs) are at the top.
These are leafy, landed housing enclaves with minimum lot sizes of 15 070 square feet.
There are 39 GCB Areas that have been designated by the Urban Redevelopment Authority. Examples include Caldecott Hill Estate (also known as URA), Dalvey Estate (also known as URA), Leedon Park (also called URA), Nassim Road or Swiss Club Road.
Nassim Road could be considered the most desirable address. Cuscaden Peak Investments’ Nassim Road bungalows were sold for S$4,500/sqft (psf), or S$206.7m.
The demand for GCBs is derived from diverse sources of wealth
When the valuations of technology firms are not as high, it may mean that tech titans buy less expensive homes. It is possible to compensate for any decrease in demand due to tech titans by increasing demand from business moguls.
GCB Area properties are hard assets, and they are seen to be excellent stores of value. People who are wealthy from risky, cyclical or speculative businesses might wisely invest some of their fortunes into a GCB Area residence.
Buying a detached property in a GCB is a costly affair. With average transacted prices of S$2,000 psf, a home can cost over S$30,000,000. Costs can increase by several millions of dollars due to redevelopment and refurbishment work.
Nevertheless it could be argued that a portion of the money spent to purchase and spruce GCB Area homes should go to the local community and economy.
For example, ultra-wealthy people can invest in new businesses, assist entrepreneurs, improve failing businesses, and promote climate change efforts. These investments may help to spur innovation and create jobs.
You can use the money to support social causes such as sports, arts, and vulnerable groups. Singapore’s community cohesion can benefit from ultra-wealthy people actively helping their community.
Analysts anticipate that, after a relatively slow 2023 for detached houses in GCB Areas, there will be a surge in transactions in 2024. Analysts project that prices will remain stable with potential for upward movement, most likely in the second half of the year.
The GCB Areas have strong drivers to support the house price over time.
The availability of detached housing in GCB Areas are scarce
Singapore has about 2,700 homes like this and that number is not likely to increase.
As developers construct new luxury apartment buildings on land purchased via state land sales or collective sale, the number of condominiums in district 9, 10 and 11, which are prime areas for luxury living, will also increase. In the case of successful collective sales, a new development is often built on top of the old one. This means that the number homes will be much higher.
Singapore could become a global wealth hub and increase the GCB buyer base
As more ultra wealthy PRs are granted citizenship, the number potential buyers for bungalows in GCB Areas grows.
Singapore’s safehaven premium is likely to rise
Singapore may become more attractive to ultra-wealthy people who want to invest in hard assets here, including homes in GCB Areas. Many ultra-wealthy investors may choose to allocate a higher share of capital here into hard assets such as homes within GCB Areas.
Singapore’s appeal will increase if more ultra-wealthy set up a base here.
A detached house with all the bells, whistles and bling in a GCB Area costs S$50,000,000. This is less than ten percent of the total net worth of a person whose networth exceeds S$500,000,000.
A GCB Area residence costing S$30,000,000 is three times cheaper than the salary earned by a corporate exec who earns S$10,000,000 annually.
Prices of land could continue to rise
Singapore has a limited amount of land, so homes in GCB Areas may continue to command a price premium. These areas provide a welcome respite from the bustling city. URA stipulates strict conditions for the planning of homes in GCB Areas. This is to maintain exclusivity and a low-rise characteristic.
GCB Areas may see their land values increase if they are zoned more intensively to meet the land needs of the future.
You can use your money to do something productive
Buying a GCB Area residence seems to be a great investment for a very wealthy person. GCB Area home owners should be aware they could face higher taxes down the road.
If taxes continue to increase, will GCB Area homeowners be taxed more in the Budget of 2024?
An owner-occupier in the GCB Area with an Annual value (AV) of S$240,000 would pay S$56.780 of property tax per year by 2024. The AV for buildings is estimated gross annual rent if the property were to be rented. This excludes furniture, furnishings and other maintenance costs.
In a GCB Area, a detached home can be a relaxing place to unwind. It’s also a unique space to create memories. And it is a wonderful venue to entertain friends and colleagues.
The ultra-rich can spend their money in any way they like. Buy luxury homes, yachts and cars. Rare wines, precious jewelery, or art.
Agnes Tan’s estate deserves credit for donating proceeds from three freehold properties at Chancery Hill Road & Dyson Road that sold for S$61m in total to charities.
Investing in a GCB Area property or other sound investments will certainly help pockets of this economy. Possibly they could be persuaded into spending more to help build businesses, support communities and nurture the sports and arts scenes.
Singapore’s status as a financial hub could increase the number of buyers.
Singapore citizens can only buy landed homes within GCB Areas. Permanent residents and foreigners can buy condos here.
Singapore has had success in wooing families offices. In the Global Investment Programme, a principal family office with net investable funds of at least S$200,000,000 may become a Public Relations Officer, subject to other criteria.
