Singapore’s young super-rich snap up the island’s priciest homes
Singapore’s young super-rich snap up the island’s priciest homes
GCBs are being snapped up by a new type of buyer: a younger generation of super-wealthy that made their money in not-so-traditional areas. (PHOTO: Roslan RAHMAN/AFP via Getty Images) By Yoojung Lee and Faris Mokhtar
(Bloomberg) — They’re the pinnacle of Singapore’s real estate market, houses so elusive they’re beyond the budget of even the island’s regular affluent class.
Known as good class bungalows, they’re ornate mansions or villas that can date back to colonial times, have plot sizes of at least 15,000 square feet (1,400 square metres), and sit in leafy grounds in the city-state’s primest districts.
Now, more and more, they’re being snapped up by a new type of buyer: a younger generation of super-wealthy that made their money in not-so-traditional areas. Their purchases are driving a surge in transactions and prices, even as cooling measures seek to tame the broader property market.
The number of good class bungalows sold last year tripled to 60 from 2019, with the average price per square foot rising to a record, according to data from property research firm Knight Frank. There are only about 2,500 such homes on the island.
Older wealthy people “are unlikely to accept the current prices,” said Henry Lim, head of good class bungalows and prestige landed at Singapore-based real estate company PropNex Realty. But the new rich have more easily accessible funds, he said. “To them, it’s ‘If I can afford, I’ll buy.’”
Before, the buyers were often business people from traditional industries, traders, top lawyers and doctors. But in the last few years, especially during the pandemic, startup founders, e-commerce executives and people who made fortunes in crypto have emerged as investors.
The latest deal involved Su Zhu, chief executive officer and co-founder of cryptocurrency-focused hedge fund Three Arrows Capital. He and his wife were granted an option to buy a bungalow in the upscale Bukit Timah area for almost S$49 million, local media the Business Times reported in December.
Earlier last year, Zhu, who’s in his 30s, tweeted that he was thinking about buying all the good class bungalows and “turning them into parks and regenerative farming.” He didn’t respond to a request for comment.
Story continues One of the houses near the Singapore Botanic Gardens, a UNESCO World Heritage Site, was purchased by Tommy Ong, who founded e-commerce marketing platform Stamped.io and sold it to Canada-based WeCommerce for as much as US$110 million last year. The price was a record S$4,291 per square foot for a total cost of S$63.7 million, according to local media reports. Ong, who’s also in his 30s, declined to comment.
And Ian Ang, the 29-year-old co-founder of local startup darling Secretlab, which makes ergonomic chairs for gamers, shelled out S$36 million for another one of the properties last year, according to local paper the Straits Times. Ang wasn’t available to comment.
The term “good class bungalow” was first used in 1980 in a government master plan to protect landed properties from creeping development and attract wealthy people to contribute to the city’s economy, according to British academic Robert Powell, author of “Singapore Good Class Bungalow 1819-2015.”
In land-scarce Singapore, where about 80% of the population lives in mostly high-rise public housing, the good class bungalows are typically located in prime districts behind dense foliage to maintain privacy. Some are more than 100 years old.
Although they’re called bungalows, they can have up to two above-ground floors. Their plots must be at least 1,400 square meters, with the house taking up no more than 35% of the area.
Another reason that makes the bungalows more exclusive? Buyers generally have to be Singapore citizens. Foreigners can get around this by acquiring citizenship or if their spouses already are. Vacuum cleaner billionaire James Dyson and Alibaba Group Holding Ltd. co-founder James Sheng are among the owners.
The new kids on the block are driving up prices. The average cost of good class bungalows went up by almost a quarter since 2019 to S$1,725 per square foot last year, according to Knight Frank.
(Source: URA Realis, Knight Frank Research) At Nassim Road, one of the most prestigious neighbourhoods in Singapore, within walking distance of the famous Orchard Road shopping belt, a good class bungalow plot would cost S$85 million now, according to Bruce Lye, co-founder and managing partner at Singapore Realtors Inc. That’s a far cry from 2019, when a home there sold for S$38.8 million.
The new group of buyers tends to be in their late 30s or 40s and prefers to demolish the existing properties to build homes that suit their taste, said Mary Sai, executive director of investment and capital markets at Knight Frank Singapore, who also specialises in sales of such mansions.
While that may lose some of the architectural examples, some of which date as far back as the 19th century, it’s no different from any other era, when owners built housing to the latest tastes.
“They are coveted by the wealthy,” Sai said. “They are trophy assets which hold their value well and are less volatile compared to stocks and shares.”
Prices of the homes are expected to increase further as supply is short and Singapore’s wealthy are on the rise, Lye of Singapore Realtors said.
The number of people with at least US$30 million in assets will jump 31% between 2020 and 2025 to 4,888, according to a wealth report published by Knight Frank last year.
Rising prices of good class bungalows are a reflection of Singapore’s overall residential property market, where values surged the most in more than a decade last year.
The market has held up well during the pandemic, with buyers capitalising on low interest rates and expectations that prices will climb further. That’s even as Singapore endured its worst recession on record in 2020 followed by several back-and-forth virus restrictions in the second half of last year.
To cool the frenzy, the government imposed a new round of measures — the first since 2018 — in a surprise announcement in December. They include higher stamp duties for second-home buyers and foreigners purchasing private residences.
It’s likely to do little to stop the younger buyers, who have accumulated wealth at a rapid pace. For them, the bungalows are a way to show they’ve arrived, rather than a method of preserving wealth, according to Alan Cheong, executive director of research at Savills Plc in Singapore.
“It’s more of the case of wanting people to know that they made the money,” said Cheong. “They don’t think like the old wealthy. They don’t try to make every cent they spend count.”
©2022 Bloomberg L.P.