Good Class Bungalows and landed properties in prime locations are out of reach for most home buyers, but suburban landed homes provide affordable alternatives with good investment potential.
The Business Times | MARCH 01, 2013
While the non-landed residential property market has been attracting much interest over the past two years, landed homes have maintained their charm as an attractive investment segment, with its prestigious home proposition and promising capital appreciation.
Although Good Class Bungalows (GCB) remain the most sought after class of landed homes, only a very small proportion of the population gets to own these crème de la crème homes, given their limited supply and high price.
Smaller bungalows on land plots below 1,400 sq metres (15,069.46 sq ft) provide a suitable alternative for home buyers who strive for landed properties but are unable to afford a GCB. Alongside bungalows, semi-detached and terrace houses are also popular choices for well-heeled Singaporeans.
The following overview on conventional landed homes pertains only to landed properties smaller than 1,400 sq metres in land area, excluding all strata-landed properties as well as landed homes in Sentosa.
Owning a landed property enables homeowners to live up to their aspirations and preferences when it comes to designing or renovating the house. This is unlikely to be achieved in strata-landed properties where homeowners share common facilities with other strata owners.
Unlike single dwellings that require approval solely from the planning authority, renovating a strata unit is more difficult due to the consent required from the management corporation, considerations from neighbouring unit(s) and the need to use common areas during the renovation process.
For these reasons, it is increasingly common for purchasers to buy old landed properties and redevelop them to their preferred design with greater flexibility.
Although common facilities are often touted as a unique selling point of strata-landed developments, some developers also provide similar facilities within the private compound of detached or semi-detached houses, enhancing the luxurious offering of conventional landed homes.
Besides GCBs as the most prestigious housing option in Singapore, smaller bungalows with land areas ranging from 400 sq m to 1,400 sq m, semi-detached and terrace houses are also popular with landed-home buyers given that they are more affordable.
In addition, maintenance of conventional landed properties is seen to be less challenging compared with GCBs because of their more manageable sizes and there being less restrictions on planning.
Home buyers have shown stronger interest for landed properties in recent years, in light of the limited supply and the potential for price appreciation. Prices of landed homes have appreciated considerably more than non-landed homes since the trough period in 2009.
Between Q2 2009 and Q4 2012, the Urban Redevelopment Authority's landed property price index rose 85.8 per cent, outpacing a 52 per cent appreciation in its non-landed property price index. Detached houses saw the largest price appreciation of 90.6 per cent, followed by terrace houses with an 87.2 per cent increase and semi-detached houses with 77.1 per cent price gain.
With an average price tag of between $20 and $30 million apiece, GCBs appeal to the most affluent segment of home buyers. Generally, detached houses with sizes ranging from 400 sq m to less than 1,400 sq m, also called "small bungalows", changed hands at around $4 million to $13 million last year. "Entry players" in the landed property segment usually go for terrace houses, which cost less, at between $1.5 million and $3.5 million each. Meanwhile, semi-detached homes are the "sandwiched" option, priced at $2.5 million to $6 million apiece.
Landed-home ownership, which is tantamount to having a stake in the country, is essentially a privilege reserved for Singapore citizens.
Purchases of landed homes on mainland Singapore by foreigners (including Singapore permanent residents) is restricted. Such buyers have to obtain permission from the Land Dealings (Approval) Unit or LDAU. Applicants have to fulfil certain criteria before permission is granted, including being a Singapore PR and making a significant economic contribution to the country.
Sentosa Cove is the only place in Singapore where non-PR foreigners may buy a landed home, though still subject to LDAU's nod. A foreigner (including a PR) may own only one landed home in Singapore (including Sentosa Cove) and this must be used for owner occupation. The land area for the property must not exceed 15,000 sq ft.
Suburban landed homes
As landed properties in prime locations might be out of reach for most home buyers as prices rise, suburban landed homes provide affordable alternatives with good investment potential. With improvements in the transportation network, living in suburban locations would not compromise transport connectivity to town. While prime districts offer a desirable lifestyle and convenience with close proximity to the city centre, landed homes in suburban areas could be a good choice for buyers with lower budgets.
In 2012, the average transacted price of detached, semi-detached and terrace houses in prime districts 9, 10, 11 were about $13.6 million, $5.5 million and $4.3 million respectively - or almost twice the prices of landed properties in the Outside Central Region (OCR) of $6.2 million, $3.5 million and $2.4 million respectively.
In addition, some landed homes in suburban areas could cost less than high-end non-landed properties. The average price quantum for non-landed properties in Districts 9, 10, 11 was about $3 million last year, higher than an average price of $2.4 million for a terrace house in the OCR.
Where are the value deals? In 2012, the most popular suburban destinations for landed homes in terms of transaction volumes were Districts 15 (which includes places like Katong, Joo Chiat and Amber Road), 19 (including Serangoon Garden, Hougang and Punggol) and 28 (which covers the Seletar area). These locations are also among those with the highest concentration of landed houses in Singapore. District 19 accounted for 20 per cent of total landed property transactions in 2012, followed by District 15 (13 per cent) and District 28 (7.4 per cent).
Home buyers looking for value buys can go for Districts 18, 22, and 25. The average prices of landed homes in these areas, including Pasir Ris-Elias, Jurong West and Woodlands, were the lowest among all districts last year. The average price of landed properties in District 18 last year was $808 per square foot (psf) on land area, while for District 22, the figure was $809 psf and District 25, $706 psf.
Although price appreciation of landed houses in these areas varies with the location and property age, investment in landed properties in these suburban districts could offer decent capital returns, in light of the recently released Land Use Plan which outlined plans to develop suburban regions such as the Jurong Lake District and North Coast Innovation Corridor.
Mary Sai is executive director, investment sales; Alice Tan is senior manager, consultancy & research; and Le Thi Dan Thuy is senior analyst, consultancy & research, at Knight Frank
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