Mortgagee auctions up 23.7% in Q1: Knight Frank
Lisa Kriwangko
MORTGAGEE auction listings rose 23.7 per cent in Q1 2022, after falling for 4 consecutive quarters. Some 47 properties - both residential and commercial - were listed under mortgagee sales, making up 58.8 per cent of the quarter’s auctions, according to Knight Frank’s Q1 2022 Auction Update report released on Monday (Apr 25).
The first quarter tally was however 59.8 per cent lower compared to Q1 2021’s 117 mortgagee listings. Residential mortgagee listings fell to 21 units, from 56 in the year-ago period, even as interest rates continued on their upward path.
“Broad-based rental improvement, especially in the private residential market, possibly provided distressed owners with the means to cover their current mortgage instalments, contributing to restraint being observed by banks in foreclosing residential properties. During the quarter, residential assets were also quick to be picked up by some auction bidders,” Knight Frank said.
The quarter also saw more offices put up for mortgagee auction, Knight Frank added, a trend that the firm expects to continue into the second half.
“As casualties from Covid-19 start to surface with the government lifting financial relief measures, there are some early signs of credit stress,” it said.
Meanwhile, Knight Frank predicts residential listings will continue to decline given strong buyer demand and robust rents.
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Including repeat listings and excluding properties sold outside of auction, there were a total of 80 properties put under the hammer in Q1, down 20.8 per cent from the previous quarter.
Owner sale listings more than halved to 28 listings from 58 last quarter, partly due to the Chinese New Year festivities. Robust underlying demand in the residential market also meant properties were quickly being snapped up, steadily reducing the inventory of those left for auction.
There were only 7 residential owner sales listed during the quarter, an all-time low outside of H1 2020 when auctions were disrupted due to Covid-19.
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Despite the drop, a total of 9 properties were sold across all auction types, bringing the quarter’s success rate to 11.3 per cent, a record high in about 10 years. Knight Frank expects success rates to be slightly higher than 5 per cent for the whole of 2022.
In mortgagee sales, 3 newly-listed residential units were sold: a 785 square foot (sq ft) apartment in Central Imperial sold for S$800,000 at 6.7 per cent above its opening price, an 893 sq ft apartment in The Shore Residences for S$1.53 million, and a 1,808 sq ft 2-bedroom penthouse at The Nautical for S$1.72 million at 1.2 per cent above the opening price.
A mortgagee retail unit at Sim Lim Square was sold for S$1.16 million or S$1,859 per square foot (psf), which “can be considered a value-buy” compared with the S$2,210 psf price it was last sold for in 2012, Knight Frank said.
Under sheriff sales, the second of 2 triplex townhouses at 8 Nassim Hill was sold for S$9.79 million (S$2,327 psf), 14.5 per cent above the opening price.
According to Knight Frank, the buyer bought the unit without first physically viewing the property “due to the prestige and limited stock of these highly coveted homes in the area”.
In owner sales, a retail unit in Sim Lim Tower sold for about S$1.46 million (S$2,049 psf), 9.5 per cent lower than the average price of S$2,252 psf for retail units in the building in 2022 year-to-date.
Knight Frank said: “While retail trades struggling in the modern digital retail economy might have led to compressed prices, there is strong en bloc potential going forward due to its central location, which also lies just outside the boundaries where new strata subdivision has recently been disallowed. Refreshed strata retail units and concepts will likely be well-received at such locations.”
Separately, 2 office units at Chinatown Point were sold under receiver sales for S$1.29 million (S$1,739 psf) and S$1.79 million (S$1,698 psf).
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