Saturday, March 30, 2013

Property auctions going, going upwards

The Business Times  |  March 30, 2013
Total sales value so far this year higher than all of 2012

The property auctions market jumped back to life in the first quarter following a sleepy 2012, with total sales value in the first three months alone exceeding that for the whole of 2012, said Colliers International.

The auctions market recorded a total sales value of $76.08 million from January to March this year, exceeding the $62.44 million chalked up for the entire 2012. The figures exclude the sale of land put up by statutory boards through auction.

Colliers now expects more than $150 million worth of transactions for the market this year.
The first quarter's strong showing came despite the lull in the secondary market - a result of the recent round of government cooling measures implemented in the residential sector. Helping to pick up the slack, however, were four high-value sales, involving mostly commercial and industrial units, which generated a total sales value of $70.1 million. Together, the four transactions accounted for 92.1 per cent of the quarter's total sales value. Of the four, two involved shophouses.

Said Grace Ng, deputy managing director at Colliers International: "Shophouses are a main draw for investors, as such property types are not affected by the punitive measures, such as the Additional Buyer's Stamp Duty or Seller's Stamp Duty, among others.

"Additionally, given that shophouses typically generate yields in the region of 2-4 per cent per annum, investors who are on the lookout for alternative investments to bank deposits which offer an average paltry interest rate of less than one per cent per annum, would find shophouses a more appealing proposition."

Among the four high-value deals was the sale of a Good Class Bungalow at Chee Hoon Avenue close to the Botanic Gardens MRT station. It was sold for $22.9 million.

In total, eight of the 113 properties put up for sale by auction were sold. Most of the properties put up for sale (103) were from owners, while 10 were listed by mortgagees, noted Colliers.

Of those sold, five were put up by owners while three were mortgagee sales - which were concluded for a total value of $4.38 million. All four of the high-value properties were put up by owners. The fifth property sold by an owner was a HDB shophouse in Bedok that was knocked down at $1.6 million.

Said Ms Ng: "Property auctions are also gaining traction with owners who own high-value properties which are traditionally put up for sale via other modes such as a private treaty, tender or expression of interest.
"The phenomenon could be attributed to the organised marketing campaign which is carried out in a transparent and targeted process, and the ability to reach out to a wider pool of potential buyers from the generated publicity."

She expects that more owners will put up high-value properties - in particular, commercial and industrial properties - for sale by auction.

But while the auction market will "continue to enjoy a healthy flow of transactions in landed residential, commercial and industrial properties, the number of residential apartments and condominium transactions is expected to be low", said Ms Ng. This is due to the continued stalemate in the secondary residential market between buyers and owners. "Buyers will continue to adopt a wait-and-see attitude, hoping for downward price adjustments, while owners are expected to hold on to their prices due to the current low interest rate environment and the general reluctance to dispose the property now - a result of the subsequent higher acquisition cost from the Additional Buyers' Stamp Duty imposed by the government," she said.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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