A GOOD Class Bungalow (GCB) property put up for sale by a bank will emerge at a Singapore auction for the first time in several years. On April 29, a 17,035-square-foot freehold site at 15 Binjai Rise that is being redeveloped will go under the hammer at an auction.
Market sources say the indicative price is S$20 million, which would work out to S$1,174 per square foot (psf) based on its land area. On the corner site is an uncompleted bungalow that will also have a swimming pool; the redevelopment is approved for 13,378 sq ft gross floor area, according to written permission granted by the Urban Redevelopment Authority.
By some estimates, it may cost a further S$1 million to S$2 million to complete the construction. To tear down the existing partially built structure and undertake a fresh construction, the cost would be higher, around S$5 million to S$6 million. The regular-shaped plot has a north-east facing and is located in a cul-de-sac behind the Pan Island Expressway (PIE).
The mortgagee (or lender) is believed to be a Hong Kong-based bank. The borrowers are understood to be members of a family who were redeveloping the property for their own occupation.
Mortgagee sales of GCBs or GCB sites rarely surface at auctions, say industry watchers. Singapore Christie’s Homes managing director Samuel Eyo said this could be due to the fact that “in recent years, most GCB buyers, whether they have purchased for their own occupation or for investment, have taken only 50-60 per cent loan-to-valuation (LTV), even if they could have qualified for more – as a matter of prudence”.
“Hence if they are stretched and need to sell the property, they have sufficient buffer to divest it themselves at lower-than-market value – without letting the property slip into the hands of the bank.”
And where GCBs do end up at auctions, typically they are put up for sale by their owners, and not the mortgagees. For instance, in 2013, GCBs in locations such as White House Park, Eng Neo Avenue and Chee Hoon Avenue were placed for auction by their owners. Since 2014, though, owners have pulled back from putting their GCBs for auction sale due to the general lull in the GCB market after the introduction of the total debt servicing ratio framework in late-June 2013, say some market observers.
GCBs are the most prestigious type of landed housing in Singapore, with strict planning constraints. The last time a GCB property went under the hammer as a mortgagee sale was in 2007, for 3C Swettenham Road. The freehold property sold for S$16.5 million or S$639 psf on its 25,802-sq-ft land area at a July 2007 auction. The property comprised a two-storey bungalow with an attic, a two-storey annex building and a swimming pool.
In 2010, No 39/39A Ridout Road had been advertised for auction as a mortgagee sale but was later withdrawn.
No 15 Binjai Rise will go under the hammer at Colliers International’s auction next Wednesday. RealStar Premier Group managing director William Wong described the S$1,174 psf indicative price for the property as reasonable, given that owners of older completed GCBs in the Binjai area have been asking mostly for S$1,300-
S$1,600 psf depending on the condition of the house.
“The pull factor of this property is the pricing. The drawback is the proximity to the PIE resulting in noise. Still, there will be takers; they can do the design to reduce the noise. I also know some GCB owners who keep their windows and doors shut all the time, with 24-hour air-conditioning,” he added.
Industry players believe that 15 Binjai Rise is likely to be a one-off phenomenon and is unlikely to spark a trend of a rise in mortgagee sales of GCBs. “Most of the clients we are servicing are prudent and buying for own occupation,” said Mr Eyo.
Other properties that will be offered at Colliers’ auction next Wednesday, to be held at Amara Hotel, will include a freehold two-storey semi-detached house on a 4,265-sq-ft site along Jalan Bumbong in Kranji. The owner is said be eyeing S$4 million.
Buyers keen on an apartment may be interested in a two-bedroom loft unit at Miro at Lincoln Road. The owner is seeking S$2.2 million for the 1,302-sq-ft unit in the freehold development near Newton MRT Station.
Another property that will make its auction debut at the Colliers event is a 2,196-sq-ft apartment at Golden Mile Complex on Beach Road comprising three bedrooms, a study and a maid’s room on a site with a balance lease term of 53 years. This is a mortgagee sale with an indicative pricing of around S$1.45 million. The 15th-storey unit boasts unblocked river and sea views.
Another mortgagee sale property going under the hammer on the same day is a two-storey freehold penthouse with roof terrace at Esterina in Haig Avenue. The indicative pricing for the 2,540-sq-ft unit, which has four bedrooms, is S$2.1 million.
According to figures released earlier by Colliers, the number of properties sent to the auction block by lenders increased to 159 last year from 32 in 2013 and 24 in 2012. For Q1 this year, the figure was 56 properties, up from 47 in Q4 last year and 22 in Q1 2014.