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Singapore Property News

More properties up for auction but few sold

Only six of the 132 units in Q1, up from 120 in Q4, snapped up for $17.87m

Posted on 28-Mar-2014
By: Lynette Khoo

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More properties up for auction but few sold

THE number of properties put up for sale via auction is increasing as more sellers are turning to the auction market when they find it hard to move sales in the secondary market.

But selling units in the auction market isn't always quicker as there are cautious buyers staying on the sidelines.

Data from Colliers International showed that a total of 132 properties were put up for sale via auction in the first three months of this year, up from 120 properties in Q4.

Despite the increased supply, only six properties were sold in Q1 for a total of $17.87 million. This is a 76.5 per cent decline from the $76.08 million a year ago, which was bolstered by the sale of four high-value properties.

"The low level of transactions this quarter reiterated the persistent stalemate between buyers and sellers," noted Grace Ng, deputy managing director of Colliers International. "Although sellers are now more willing to negotiate in light of the softer market sentiments, it is a buyers' market now - with many adopting a wait-and-see approach in anticipation of price declines on the back of supply pressures in the near future."

Among the 132 properties put up for auction in the first quarter, 110 were put up by owners who sought to use auctions to indicate their serious intention to sell.

The number of properties put up for mortgagee sale at auctions also rose to 22 - the highest quarterly number since Q4 2010. There was an average of only eight mortgagee listings per quarter last year and an average of six per quarter in 2012.

Colliers is expecting the number of properties put up for mortgagee sales to increase, particularly in the high-end residential and retail segments.

Ms Ng noted that the pool of potential buyers in the resale market has shrunk, making it challenging for owners to dispose of their properties in the secondary market when they default on their mortgage payments.

"This is a different situation from the period between 2011 and 2012, when the buoyant property market was further boosted by a low interest rate and high liquidity environment," she added. "Borrowers who were in default of their loan payments could easily sell their properties in the open market on their own."

Mok Sze Sze, head of auctions and sales at Jones Lang LaSalle (JLL), reckoned that the total debt servicing ratio (TDSR) framework, which caps the loan limit at 60 per cent of gross monthly income, has also shrunk the pool of potential buyers for units with higher price tags in the auction market.

This could likely explain why there was no flying of hands or shouting of bids for properties at recent auctions.

Yesterday, only one property went under the hammer at an auction held by JLL - a four-bedroom apartment in Draycott 8 located in the prime District 10 after receiving only one bid at $5 million, or $1,746 per square foot (psf). This represented a $2 million loss for the seller who bought the unit for $7 million in December 2009. The buyer for the 2,863-sq-ft unit was a Chinese national, who declined to be identified but said he was buying the unit to reside in it.

Sales of industrial units are also taking a longer time to be sold. Two factory units at WCEGA Tower at Bukit Batok Cresent, owned by TPPL Pte Ltd, were put up for mortgagee sale yesterday but received no bids.

"Even for non-residential units, we are seeing more end-users rather than investors or those who may consider a dual purpose," Ms Mok said.

Overall, sellers may have to accept more haircuts going forward in order to move their units more quickly, she added.

At the auction held by Colliers on Wednesday, the properties' list was long but only two properties changed hands. One was a 883-sq-ft freehold apartment at The Anchorage along Alexandra Road, which was sold for $1.1 million or $1,246 psf, while the other was a 366-sq-ft shop unit at Peninsula Shopping Centre that was sold for more than $1 million.

Earlier, a strata-titled factory unit at Enterprise Hub in Jurong went under the hammer for $1.21 million, while four adjoining office units at Orchard Shopping Centre in Somerset were collectively sold for $8.55 million.

Ms Ng said she expected the total sale value for the auction property market here to come in at $70-80 million for the whole year, a 13-24 per cent decline from last year.

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