First cracks appear in Sentosa Cove haven

Bungalow owner defaults on mortgage payments, sale may follow
Kalpana Rashiwala, Business Times 8 Jan 09;

(SINGAPORE) The first mortgagee sale of a bungalow on Sentosa Cove - an upscale waterfront housing haunt that was all the rage among well-heeled investors during the bull run - could be in the works.

BT understands that a permanent resident who developed his bungalow on a 99-year leasehold plot on Ocean Drive has defaulted on his mortgage payments and the financial institutions involved are considering whether to sell the property or - if the regulations permit - to lease it out in the meantime.

The two-and-a-half-storey waterfronting property has a land area of about 8,300 sq ft. The first storey has a swimming pool, separate living and dining areas, wet and dry kitchens and a guest room. The second level has a total of five bedrooms, each with an attached bathroom. The attic has an entertainment room.

A couple of bungalows on Sentosa Cove were put on the auction block last year. One, which had been put up for sale by its owner, was offered at an October auction conducted by DTZ. There were no takers at the asking price of $18 million, which reflects about $2,300 per square foot based on the bungalow's land area of 7,800 sq ft. The Singaporean owner, who has lived in the unit, is now trying to sell the unit by private treaty, said Shaun Poh, DTZ senior director for investment advisory services and auction.

The asking price being sought is similar to the level that boutique developer Wah Khiaw is also said to be quietly seeking for a couple of completed and leased bungalows, which are also along Ocean Drive.

However, industry observers say that such asking prices are considered steep in today's market. A more realistic price level for bungalows on Sentosa Cove today would be around the $11-12 million range or about $1,300 to $1,700 psf of land - but even then they would get 'a good run for their money' from freehold Good Class Bungalows on mainland Singapore. 'For about $10-11 million, one could get a 'decent' GCB in a liveable condition in say, Yarwood Avenue in the Dunearn Road area,' a property agent pointed out.

'Sentosa Cove has lost its appeal in today's market. A couple of years ago, this kind of waterfront living was the in-thing, when people had money, credit was easy and foreigners were rushing to buy such properties, especially with the expedited approval channel for foreigners to buy landed homes on Sentosa Cove. In today's market, foreigners have suffered the most.

'As for Singaporeans, they may still not be used to the idea of waterfront living. If you drive at Sentosa Cove on weekdays, you can see many empty completed bungalows. Some families have lived in the units but find the location inconvenient, for example, ferrying children to and from school,' the agent said.

'They would much prefer the convenience of owning a freehold GCB on mainland. The way I look at it, selling bungalows on Sentosa Cove is going to be very difficult in the near future,' he added.

DTZ's Mr Poh also revealed he is working with a few other Singaporeans keen on selling their Sentosa Cove bungalows. 'In the past, many Singaporeans had bought sites for bungalow development with the intention of selling the completed properties to foreigners. But in the current climate, that's going to be tough. So these sellers will have to be realistic in their pricing as they'll face competition from both foreigners and Singaporeans trying to divest their bungalows on Sentosa Cove,' he said.

Mr Poh also reckons the market for landed waterfront housing on Sentosa Cove has yet to mature among Singaporeans, who might take some time to catch on to a lifestyle of having their own bungalows, with their own jetty to moor their yacht outside their garden. 'Even among valuers, there can be a wide variation of opinions on valuations of such homes, especially when there haven't been many transactions,' he said.

Agreeing, CB Richard Ellis executive director (valuation) Li Hiaw Ho said there have hardly been any transactions of bungalows on Sentosa Cove. 'While we all know values have dropped, it is harder to pinpoint the extent of the drop until there is more evidence of transactions.'