Friday, June 29, 2012

Little action at property auctions

Straits Times: Thu, Jun 28
AUCTION activity in the property market was muted in the first six months of the year, with just 198 properties put up for sale and only 10 sold, a report has found.

Most were put under the hammer by owners rather than mortgagees such as banks.

The 10 that found buyers had a total value of $34.3 million. This marks the second-lowest sales value since the onset of the global financial crisis in 2008, Colliers International said.

Only the 13 sales from July to December last year were worth less, at a paltry $26.4 million.

The report noted that the declining level of mortgagee listings - just seven in the first half of this year compared with 389 in the same period in 2007 - is due to the improved financial position of those taking mortgages. This comes on the back of low interest rates, a high liquidity environment and a healthy rental market.

Auction volumes have also steadily fallen from the high of 810 properties placed under the hammer in the first six months of 2007. Of these, however, only 131 properties were snapped up, worth a total of $263 million.

But it was the industrial sector that led the pack in the first half of the year. Factory space enjoyed strong demand, securing 27 per cent of the market's sales value.

This consists of three industrial properties that were sold for $9.1 million in all. They are: a Loyang Way JTC factory, sold for $7.1 million; a terrace factory at Tradehub21 in Boon Lay Way for $1.5 million; and a flatted factory in Woodlands Link for $500,000.

In the absence of stringent regulatory curbs, commercial properties - such as strata-titled shop units and shophouses - also continued to attract investors, owing to higher yields of 4 to 6 per cent. This is well above the 2 to 3 per cent yields from residential properties, the report noted.

For instance, one strata-titled shop at Fortune Centre in Middle Road was sold for $450,000 while another was sold in People's Park Centre for $730,000.

Ms Grace Ng, Colliers' deputy managing director, said the market could see some high-end homes surfacing as mortgagee sales due to the subdued activity.

'The property auction market in the second half of this year may see a pick-up in residential sales - the result of a spillover in the buoyant buying interest. Astute buyers are expected to look for value buys in the resale market, amid new residential projects in suburban areas achieving record-breaking prices,' she said.

Sales in the commercial and industrial sectors are expected to surpass $30 million in the second half of this year, she added...
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