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No buyers for bankrupt trader's bungalow
ONE man's misfortune might be another man's opportunity.
But no one succeeded in seizing the chance to buy the freehold bungalow at 85 Branksome Road, owned by the recently bankrupted managing director of spice trader Pars Ram Brothers. The property was put up for sale by the lender on Wednesday at DTZ's auction, but it failed to find a buyer despite a healthy turnout.
This was despite the property attracting a great deal of interest. Five bids ranging from S$13 million to S$15 million were made, all below the opening price of S$16 million which translates to S$1,213 per square foot on the land area of 13,189 sq ft.
The single-storey bungalow is where Kirpa Ram Sharma, who was Pars Ram's managing director, once lived. The auctioneer showed pictures of its spacious garden, huge car porch, and seven bedrooms, all vacated.
It was one of DTZ's best auction turnouts, head of auction Joy Tan said. More than 200 people jostled in the room at Amara Hotel, with others spilling out into the common area.
After the property was withdrawn, people started leaving, a sign that they were there just for that property.
Ms Tan said the agency had received many calls about the property even before the auction. Many of these were from residents living in the vicinity wanting to expand their property or buy the plot for their children.
Asked why did it then fail to transact at the auction, she said: "It could be that some (prospective buyers) are still waiting for in-principle approval for their bank loans. Some are still trying to get alternative names to come in (as the buyer) to avoid ABSD (additional buyer's stamp duty).
"Successful bidders have to put a name down on the spot. So they were there to observe. If the property is still available, they will come back for private negotiations and put a name down then."
Mok Sze Sze, JLL's head of auction, said there is still a bid-ask price gap. "I think everyone who goes in has a price in mind, so not everyone bids. There were people interested, but the opening price is higher than what they're looking at."
DTZ said the property has potential for redevelopment to a two-storey bungalow, or even to be subdivided for redevelopment into a pair of bungalows or semi-detached houses, subject to the authorities' approval.
This is a mortgagee sale, which occurs when financially stretched borrowers are unable to repay their loans, resulting in banks repossessing these properties and putting them up for auction.
Mr Sharma, his wife and son have been declared bankrupt, following the liquidation of their spice and nut trading business. Mr Sharma had liabilities of more than US$130 million, and had given personal guarantees to a number of banks for loans extended to Pars Ram, which was put under provisional liquidation last November. His wife and son had acted as joint guarantors for loans from an Indian bank. The firm is said to owe money to between 10 and 17 banks.
Data from Colliers showed some 70 mortgagee listings in the first three months of the year, 25 per cent more than a year ago, as more property owners struggle to service their monthly mortgages. Commercial lender sales appear to be on the rise. There were 13 industrial, seven retail and two office listings this quarter. The remaining 48 were residential listings. Of this, 15 were landed properties.
In terms of closed deals, only eight properties were sold in Q1, generating just under S$10 million. Most were commercial properties, for which ABSD does not apply. Colliers noted that many prospective buyers refrained from bidding as they wanted to negotiate for a better price after the auctions.