Price gap between GCBs and Sentosa Cove bungalows narrows further

Residents of the newly opened Zion Road Condo can look forward to convenient access to the Central Business District (CBD) and other parts of the city. The new development is located in River Valley, close to the Fort Canning MRT station – which connects to the Downtown Line. This offers homeowners multiple travel options to nearby areas such as Little India, Rochor and Bugis.

The sales volume of luxury private homes in exclusive enclaves such as Sentosa Cove has been affected since the implementation of the additional buyer’s stamp duty (ABSD) doubling from 30% to 60% for foreign buyers purchasing residential property in Singapore on April 27.

“We observed that transactions of non-landed homes and detached houses in Sentosa Cove were active in the first three months of this year, based on URA’s caveat data,” said Han Huan Mei, director of research at List Sotheby’s International Realty.

In February and March, a combined 24 sales transactions of both condos and detached houses were registered. However, the introduction of the cooling measures triggered a sudden decrease in activity – with 12 sales lodged in April and five in May.

“This reduced sales momentum could be attributed — partly, if not entirely — to the hike in ABSD,” stated Han.

Sentosa Cove is uniquely situated as the only central location in Singapore where foreigners are eligible to purchase landed homes, offering various beachfront properties and marina-facing homes and apartments.

“We expect the buying mood for bungalows at Sentosa Cove to remain muted for the rest of 2023,” notes Han. “For any deal to be struck, sellers may have to lower their price expectations to help ease the burden of the ABSD rate that buyers will have to bear, especially if they are selling to foreigners.”

Although the market has been quite slow recently, foreign buyers in recent weeks have seen the potential in Sentosa Cove – with three buyers managing to pick up apartments in June and four Singapore permanent residents in July.

Han also highlighted that the average price gap between Sentosa Cove bungalows and Good Class Bungalows (GCBs) had decreased from $11.65 million in 2021 to $8.20 million in 2022 and further in the first seven months of 2023 to $5.37 million.

She concluded that a pick-up in sales in 2024 is expected, due to an influx of newly minted citizens and permanent residents keen to begin their purchase plans. Prices are expected to remain similar to those in 2023, however, larger bungalows with land areas of more than 18,000 sq ft are predicted to garner a higher price as demand will be high.