Making a Quick Profit from Good Class Bungalows

Some rich people are getting richer by selling their new Good Class Bungalows (GCBs) for a quick profit.

An analysis of caveats by Savills Singapore revealed that eight such properties were bought and resold at an average profit of about 20% in the past 12 months.

And considering that GCBs now easily cost upwards of $10 million, the investment returns are attractive.

A caveat is a legal document lodged with the Singapore Land Authority by a purchaser to protect his/her interests after an option to purchase is exercised or a Sales & Purchase Agreement is signed.

According to the caveats lodged, one GCB in Peirce Road was bought eight months ago for $4.3 million and resold three months later for $9 million. Another in Queen Astrid Park was bought for $12.5 million and resold a month later for $16 million.

Steven Ming, director of Savills’ GCB arm Prestige Homes, said the number of ‘quick sales’ has increased since the property market started to pick up but added: ‘A point to note is that it does not make up a lot of transactions.’

GCBs are located in designated areas, mostly in District 10, and have to be on a plot of at least 15,000 sq ft. There are about 2,500 such homes here.

Savills’ analysis did not include detached houses on plots of less than 15,000 sq ft. As such, it does not include the many new houses coming up at Sentosa Cove or ordinary detached houses that may sit on land as small as 4,300 sq ft up to 15,000 sq ft.

Mr Ming estimated that about 10% of recently transacted GCBs have been bought and resold within a year, with an increasing number bought by permanent residents. So far this year, there have been 68 transactions.

The ‘quick sales’ - Mr Ming believes ’speculation’ is too strong a word - can mostly be attributed to opportunistic selling.

‘Some buyers went into the market one or two years ago without anticipating that prices would increase,’ he said.

But with his 12-month projection of a further 10-15% increase in prices for GCBs - similar to that for high-end condominiums - more may see GCBs as a lucrative investment.

Giving an insight into GCB buyers, Douglas Wong, associate director of Knight Frank’s GCB arm Regal Homes, said the pool of buyers is very small.

‘There are probably between 800-1,000 such buyers and many of them own more than one GCB. Some own three to four,’ he said.

Mr Wong also believes that ’speculator’ is not the right term for these investors. ‘They are not really speculators because it’s not easy to speculate in this segment,’ he said, referring to the big price tags.

Mr Wong, who has been in this market for close to 10 years, believes that these buyers are long-term investors.

Still, he too has seen some ‘quick sales’ recently, saying that one GCB in the Nassim area was recently sold for $15 million by a buyer who paid $9.8 million for it a year ago.

Perhaps the surest sign that the GCB market is hot must be that the first collective sale could take place soon.

Credo Real Estate is marketing a 26,254 sq ft GCB site in Bin Tong Park, and Credo managing director Karamjit Singh said the owners of the neighbouring GCB are keen to cash out too, so much so that they are prepared to either sell part of their own land or even the whole plot as a ‘collective sale’.

The two GCBs combined could yield enough land for a total of three GCBs, so even if the present owners choose to stay, they could sell one house for $11-13 million.

Mr Singh estimated that the potential return on such a development could be 20-3%, ‘which is not bad’, he said.

Source: The Business Times, 28 August 2006

Tuesday July 25, 2006

Tuesday July 25, 2006

Support Line

Johor Land has been correcting on easing volume over the past seven days. The stochastic is attempting to reverse from the neutral zone while the moving average convergence/divergence indicator appears in danger of slipping below the signal line. Analysis suggests that if the prevailing trend is indeed still constructive, a rebound should come about soon, with strong resistance expected at the RM1.17-RM1.20 band. Initial support is seen at 90 sen.


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KPJ Healthcare: THE upward momentum of KPJ Healthcare shares has paused for a breather in the wake of profit-taking activity after testing the lower band of the RM1.90-RM2.00 heavy resistance zone, a decisive bullish breakout of which may trigger a rally towards the next strong hurdle of RM2.40 in the near term. The moving average convergence/divergence indicator remains positive, implying that there is more upside potential in the near term. Support is at RM1.80.


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SYF Resources: SYF Resources shares continued to consolidate after a futile attempt to penetrate the 100-day simple moving average of RM1.18 on July 11. The stochastic is in bearish extended-move territory and the moving average convergence/divergence indicator is expanding downward against the trigger line. Given the negative signal, prices may be under pressure. Current support and resistance are pegged at 68 sen and 90 sen respectively.


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# The comments above do not represent a recommendation to buy or sell

Singapore: One of Most Transparent Markets

Jones Lang LaSalle’s (JLL) latest Real Estate Transparency Index has listed Singapore under Tier 1 (Highly Transparent), up from Tier 2 (Transparent) in the last survey in 2004. The survey of 56 markets shows property markets around the world have become more transparent over the past two years, driven by the rise of cross-border investment opportunities and multinational occupiers.

JLL also highlighted the fact that real estate investment trusts (Reits) have enhanced the need for greater transparency wherever they are introduced in the Asia-Pacific region.Besides Singapore, the only other country in the Asia-Pacific to make it to Tier 1 in the latest survey is Hong Kong, which was also previously in Tier 2.

The two joined Australia and New Zealand, which were already in Tier 1 in the 2004 study.On a global basis, Australia, US, New Zealand, Canada and UK took the top spots as the most transparent countries this year.

Although Singapore has moved to a higher transparency band, its numerical ranking in the survey of 56 countries slipped a notch from ninth position in 2004 to 10th this year. France, which had been ranked 11th two years ago, moved up to ninth spot.

The five-tier transparency ranking system ranges from Tier 1 (Highly Transparent) to Tier 5 (Opaque). Vietnam, Venezuela and Egypt emerged as the least transparent markets.

Ranking for the study was based on five attributes of real estate transparency - availability of investment performance indices, availability of market fundamentals data, listed vehicle financial disclosure and governance, regulatory and legal factors, and professional and ethical standards.

‘Overall, two-thirds of the countries ranked in our 2004 study exhibited some or significant improvement,’ said Dr Jacques Gordon, global investment strategist at LaSalle Investment Management, JLL’s fund management arm.

‘Some 14 countries moved up a full tier in our five-tier transparency ranking system and none slipped back. Additionally, many more countries earned higher transparency scores while remaining in the same tier.’

Source: The Business Times, July 13, 2006