THE poor business climate in 2023 is likely to materialise in 2024 in the form of mortgagee listings, given the time lag for economic distress to be reflected in the auction market, said Knight Frank on Monday (Jan 29).

The real estate consultancy expects more listings from the commercial and industrial sectors as investors and owners seek to dispose of underperforming assets for recycled capital to catch better investment opportunities.

“Therefore, owner listings as well as under-stress properties that did not make the listings in 2023 are likely to appear on the auction platform in 2024,” said Knight Frank. It projects a success rate of between 5 and 7 per cent, with more listings expected for the whole of 2024.

In the fourth quarter of 2023, auction listings fell 2.9 per cent on the quarter to 99, but were unchanged from Q4 2022. These rounded off the year with a total of 360 listings, according to Knight Frank’s market update.

Mortgagee sale listings rose 6.9 per cent to 31 in the last quarter, comprising of 22 residential and nine non-residential listings.

For the whole year, residential properties made up 64.2 per cent of the total mortgagee listings, with a majority being non-landed properties. “Most of the non-landed listings sold were one- to two-bedroom apartments located in the fringe and suburban regions, suggesting that private homes in these areas continued to offer a more palatable entry price,” noted Knight Frank.

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In the commercial and industrial sectors, the combined listings fell to 38 in 2023, with 11 retail, five office and 22 industrial listings.

Knight Frank added that despite a bearish economy, 13 industrial properties and one office unit were sold within the year, with two of the industrial properties sold within the quarter. “While the stressed economy might have caused some distressed commercial properties to be put up for sale, it did not deter others from entering the commercial or industrial space to set up new businesses.”

In Q4, the 66 owner sale listings were a decrease of 5.7 per cent on the quarter and 8.3 per cent on the year.

For the whole year, owner sale listings reduced 4.4 per cent to 239 listings. “Residential properties made up 36.4 per cent of the total owner listings, followed by retail, industrial and office which comprised 32.6 per cent, 19.2 per cent and 10.5 per cent of the total owner listings respectively.”

Knight Frank highlighted that while the overall owner sale listings dipped when compared with a year ago, listings rose across several property types, especially given the stagnating rental incomes and elevated interest rates in 2023.

“In the commercial and industrial sectors, the tight business environment might have proven too challenging for some business owners, resulting in the offloading of these assets to recoup some capital and to consider other enterprises to venture into,” it added.

Some 24 properties, at S$34.8 million gross sales value, were knocked down last year, translating to an overall success rate of 6.7 per cent. The consultancy firm noted that although the total number of properties knocked down in 2022 was 40, with a value of S$90.3 million, the success rate in 2023 is typical for the auction market, considering the pre-pandemic levels.

Among the properties sold at auction in 2023, some 21 were mortgagee sales while two were owner sales. This translated to a success rate of 19.8 per cent from the 106 mortgagee listings, and a 0.8 per cent success rate from the 239 owner listings.

“Yet, this does not discourage owners from using the auction platform,” said Knight Frank, noting that an estimated 45 to 50 per cent of listings are typically sold by private treaty outside of the auction.