Auction market rebounds this quarter

[SINGAPORE] Of the 44 properties sold at auction last year and so far this year, 80 per cent were successfully hammered upon their first appearance, property consulting group JLL said on Thursday.

These include the two largest auction transactions so far this year: four strata office units at Orchard Shopping Centre that fetched S$8.55 million in March, and a freehold residential development site in Brighton Crescent that sold for S$9.1 million on Wednesday at an auction conducted by Colliers International.

In March this year, too, a condo unit at Draycott 8 - in a prestigious residential locale - changed hands for S$5 million at its first auction.

Mok Sze Sze, head of auction and sales at JLL, said that the 44 properties comprised a good mix of owner sales and mortgagee sales. "Sellers have become more realistic while buyers are more willing to bite at reasonable prices. As evidenced by the spontaneous bids and immediate sale of the successfully hammered auction properties, buyers are seeking quality buys and tend to be more decisive when price expectations are matched," she added.

In terms of seller profile, the number of properties put up for auction by mortgagees (or lenders) has been on the rise. Ms Mok said that the figure in the first nine months of this year is the highest in five years since 2010.

This trend is also reflected in data compiled by Colliers International, which shows the number of properties put for auction by mortgagees climbing to 112 in the first nine months of this year from 20 in the same year-ago period.

On the other hand, the number of properties put up for auction by their owners has eased to 274 from 348.

Grace Ng, deputy managing director and auctioneer at Colliers, noted that the increase in the number of properties being put up for auction by lenders is due to the stricter regulatory and financing environment - as a result of which borrowers in default find it difficult to sell the property on their own. Buyers nowadays have to come up with higher cash outlay due to government measures such as the total debt servicing ratio (TDSR) framework and the additional buyer's stamp duty (ABSD).

"Moreover, buyers continue to be cautious because of concerns of mounting supply of residential units and the impending rise in interest rates. "

Ms Ng also commented that "many condo units in high-end residential enclaves in Districts 1 (such as Marina Bay) and 4 (Sentosa Cove), as well as 9 and 10 (including Orchard area, Scotts and Stevens roads) have featured strongly among mortagee listings because demand from foreigners has dried up due to hefty ABSD rates".

Combining mortgagee and owner sales, nine properties have changed hands so far this quarter for a total S$30.5 million at auction (the final number will be known on Tuesday (Sept 30) afternoon, after the last auction for the month, by Knight Frank, has been concluded).

This compares with nine properties transacted for a total S$9.3 million in Q2 this year and six properties that changed hands at S$17.9 million in Q1 this year.

The year to date total of S$57.6 million is shy of the S$87.7 million done in the first nine months of last year, going by Colliers' numbers. Ms Ng forecasts the full-year 2014 figure will be around S$80 million.

This would be lower than the S$91.6 million for last year - boosted by a strong Q1 showing of S$76.1 million. In the Jan-March 2013 quarter, there were several big-ticket properties that changed hands at auction, such as a Good Class Bungalow at Chee Hoon Avenue (S$22.9 million), and four adjoining shophouses along North Bridge Road (a total of S$15 million).

Full report is available on BTInvest (http://www.btinvest.com.sg/property)