GCBs may seem like a no brainer for the rich. However, there are plenty of other good ways to use money
Singapore’s private housing market is dominated by detached homes. The Good Class Bungalows Area (GCB). In GCB Areas, new detached homes must have a minimum of 15,070 feet squared (sq.ft.). There are 39 GCB Areas in the United Kingdom, including Caldecott Hill Estates (Caldecott Hill Estate), Dalvey Estates (Leedon Park), Nassim Roads (Nassim Road) and Swiss Club Roads.
When technology valuations are less inflated, tech titans might be less active in purchasing high-end homes. Any decrease in the demand for top-end homes from tech giants can be made up by an increase from other business tycoons.
GCB Area home are hard assets which are considered good store of value. People who gain fortunes from risky businesses or cyclical industries may be wise to invest in a GCB Area Home.
Nassim Road has to be the number one address. Cuscaden Peak Investments bought three Nassim Road Bungalows freehold for S$4,500 square feet (psf). This was worth S$206.7million.
Buying a detached home within a GCB zone requires a budget in excess of S$30,000,000. Transaction costs and renovation or redevelopment work can cost several millions.
Singapore has approximately 2,700 such houses, and this number is unlikely ever to grow.
As developers build new apartments using sites purchased by state land tenders, or through collective sales, the supply of luxury condominiums in districts 9, 10, 11 and 12 will grow. When successful collective sale occurs, the next development built on the same site as the previous one will often have many more apartments.
GCB demand is derived from a wide range of assets
Singapore is a growing hub of wealth, which could lead to GCBs being more popular.
Singapore is a growing wealth management center, and while the pool for buyers in GCB Areas will be more limited compared to the luxury apartment market, the pool may expand.
Singapore citizens cannot buy landed property in GCB Areas. Permanent residents (PRs), foreigners and non-residents are all free to buy condominiums in this area.
Singapore has succeeded in wooing many family offices. In the Global investor Programme, family office principals with a net investable amount of S$200m can become PRs, if they meet certain criteria.
If more ultra rich PRs became newly minted citizen, the number buyers of bungalows at GCB Areas would increase.
Singapore’s safety-haven premium might rise Singapore assets could be valued higher because it is considered a safe place in an increasingly chaotic world. Some ultra-wealthy persons may allocate a bigger share of their money to hard assets in Singapore. This includes homes in GCB Areas.
Singapore’s appeal for the ultra-wealthy will be enhanced if there are more ultra wealthy people who set up home here.
A detached home in a GCB Area, with all its bells and whirlwinds, costing S$50mil is less 10 per cent than the net worth an individual who has a networth exceeding S$500mil.
The cost of a GCB Area Home is S$30 Million, which is about three times that of a corporate exec’s annual salary.It is possible that land values will continue to rise
Singapore’s land scarcity means that homes in GCB Areas continue to command a high price, as these areas provide a refuge from living in a densely populated metropolis. URA sets strict planning conditions to protect the exclusivity, low-rise and character of GCB Areas.
GCB Areas could also see a rise in land values if more intensive uses are allowed to meet future land usage needs.
Spend money efficiently
Analysts project that the number detached homes sold in GCB Areas is expected to increase in 2024, following a quieter 2023. Analysts typically expect prices to rise, and there is still room for improvement, especially later in this year.
House prices in GCB Areas will continue to be supported by the strong drivers.
It is difficult to find detached houses in GCB Areas
Buying a GCB Area Home seems like a smart investment for a super-wealthy person. GCB Area owners must be aware of the possibility of higher taxes.
Taxes are becoming more progressive. Could GCB Area owners see their taxes increase or be added to in Budget 2024 if taxes become more progressive?
Owner-occupiers of GCB Area homes with an annual value (AV), which is currently S$240,000 pay property taxes of S$56.780 per year in 2024. The AV (Annual Value) of a building is the estimated annual gross rent of the property, excluding the furniture, furnishing and maintenance fees.
Agnes Tan’s Estate deserves credit for leaving to charities proceeds from the sales of three freehold residences at Chancery Hill Road (and Dyson Road) that fetched S$61million in total.
The super wealthy here do support the local economies by investing in sound investments such a GCB Area Home. Maybe they can be convinced to spend even more on businesses, community support and the arts and sports scene.
A detached property in a GCB Area provides a comfortable place to unwind. This can also be a unique place to create lasting memories.
Certainly, ultra-wealthy people should have the freedom to spend as much money as they want. Buy expensive homes, yachts luxury cars, expensive jewellery or art.
Nonetheless, some money that’s used to buy and spruce a GCB Area property should probably be spent to better support the community and its economy.
For instance, the ultra-wealthy could fund new business, support entrepreneurs, turn failing businesses around or promote efforts against climate change. Such investments may create jobs and encourage innovation.
Money can also go to funding social causes, sport, arts, or the needs for vulnerable groups. Singapore will benefit from social cohesion if the ultra-rich help the community.