New Reporter
24-07-23, 11:25
Distressed home sales fall in Q2 despite continued bankruptcy pressure
Jul 24, 2023
FEWER properties in Singapore went under the hammer in the second quarter of 2023, even as interest rates continued to soar and property owners remained under pressure.
According to data crunched for The Business Times by real estate consultancy Edmund Tie, there were a total of 62 auction listings in Q2, down 15.1 per cent from 73 in the previous quarter.
Of the 62, just 18 were mortgagee listings, down 35.7 per cent from the previous quarter’s 28. Owner listings accounted for the remaining 44, slipping marginally from 45 in Q1.
The majority of mortgagee listings in Q2 – at 52 per cent – were residential properties. Retail and industrial properties accounted for 24 per cent of listings each.
Meanwhile, around 45 per cent of owner listings were residential properties, 32 per cent retail, 15 per cent industrial, and 5 per cent office. The remaining 3 per cent comprised other property types, including medical suites.
Statistics from the Ministry of Law also showed that applications for bankruptcy in April and May were slightly higher than the year before – at 301 and 314, respectively, from 300 and 297 in April and May last year.
Some 115 and 108 bankruptcy orders were made in April and May, respectively. In comparison, there were 90 and 96 bankruptcy orders issued in April and May last year.
In total, the number of undischarged bankrupts stood at 9,438 as at May 31.
Joy Tan, Edmund Tie senior director and head of auction and sales, attributed the drop in mortgagee listings to the “robust” primary and secondary market.
“Financially distressed owners may be able to sell their properties themselves in the open market,” she said.
“Plus, given the strong rental market witnessed across Q4 2022 to Q1 2023, owners could also obtain a healthy rental income to buffer their monthly mortgagee payments.”
The Urban Redevelopment Authority’s (URA) Q1 data showed a 7.2 per cent quarter-on-quarter increase in the overall rental index for private homes. This followed a 7.4 per cent growth in the previous quarter.
Year on year, the rental index for Q1 2023 was up 33.4 per cent.
Notably, Q2 saw the sale via auction of four strata-titled industrial units, with a total sale value of S$4.78 million.
This includes two units at 60-year leasehold Enterprise Hub in District 22 (Jurong, Boon Lay), which transacted at S$1.02 million each, and one at 60-year leasehold Midview City in District 20 (Bishan, Ang Mo Kio) for S$850,000. The fourth was a unit at freehold Tong Lee Building in District 13 (Geylang, Potong Pasir), which changed hands at S$1.89 million.
“Investors are displaying growing acceptance towards leasehold industrial properties with shorter remaining lease durations, typically 30 to 60 years,” said Tan.
This is likely due to their “high risk tolerance” as financial markets remain volatile, she said.
There were also two sub-sale transactions in Q2 that were made below their original prices – a 732 square foot (sq ft) unit at freehold luxury condo One Draycott was sold for S$2.2 million, or half a million dollars less than its original price of S$2.7 million.
The other, a 538 sq ft unit at 99-year leasehold The Essence, transacted at S$700,000, slightly lower than its original price of S$760,000.
Sub-sales are secondary market transactions that occur before a condo project is completed.
Still, Knight Frank head of auction and sales Sharon Lee noted that these transactions may not necessarily be distressed sales.
“Sometimes, owners might sell (the current unit) at a lower price because they may have bought another unit, so they need to sell it so as not to incur the Additional Buyer’s Stamp Duty (ABSD),” she said.
The units could also have been sold to buy another condo unit at a cheaper price, said Lee. In which case, the owners may not mind selling it for a “much lower price”, since the savings made from the other transaction could be larger than any loss.
Furthermore, it would be difficult to conclude that these transactions are distressed sales without knowing the condition of the home or the owner’s financial situation, she added.
Joseph Wong, OCBC head of consumer credit risk management, highlighted that the number of property foreclosures by the bank over the past three years has been “low and stable”.
Going forward, Edmund Tie’s Tan believes that mortgagee listings might increase, but only further down the road.
“On the back of April’s (property cooling) measures and the continued increase in interest rates, coupled with the rental market beginning to slow down in Q2 2023, the increase in the number of mortgagee listings may only be visible in 2024, since there is usually a time lag between banks repossessing the properties and putting them up for auction,” she said.
For now, rental rates remain buoyant and the secondary market “healthy”, so owners can still sell their properties in the open market “very quickly”, said Tan.
She added that there might be an increase in interest in commercial properties, since these transactions will not incur ABSD.
“Plus with the increase of family offices in Singapore, the strata office market will be seeing more demand that is further supported by the lack of supply.
https://www.businesstimes.com.sg/property/distressed-home-sales-fall-q2-despite-continued-bankruptcy-pressure
Jul 24, 2023
FEWER properties in Singapore went under the hammer in the second quarter of 2023, even as interest rates continued to soar and property owners remained under pressure.
According to data crunched for The Business Times by real estate consultancy Edmund Tie, there were a total of 62 auction listings in Q2, down 15.1 per cent from 73 in the previous quarter.
Of the 62, just 18 were mortgagee listings, down 35.7 per cent from the previous quarter’s 28. Owner listings accounted for the remaining 44, slipping marginally from 45 in Q1.
The majority of mortgagee listings in Q2 – at 52 per cent – were residential properties. Retail and industrial properties accounted for 24 per cent of listings each.
Meanwhile, around 45 per cent of owner listings were residential properties, 32 per cent retail, 15 per cent industrial, and 5 per cent office. The remaining 3 per cent comprised other property types, including medical suites.
Statistics from the Ministry of Law also showed that applications for bankruptcy in April and May were slightly higher than the year before – at 301 and 314, respectively, from 300 and 297 in April and May last year.
Some 115 and 108 bankruptcy orders were made in April and May, respectively. In comparison, there were 90 and 96 bankruptcy orders issued in April and May last year.
In total, the number of undischarged bankrupts stood at 9,438 as at May 31.
Joy Tan, Edmund Tie senior director and head of auction and sales, attributed the drop in mortgagee listings to the “robust” primary and secondary market.
“Financially distressed owners may be able to sell their properties themselves in the open market,” she said.
“Plus, given the strong rental market witnessed across Q4 2022 to Q1 2023, owners could also obtain a healthy rental income to buffer their monthly mortgagee payments.”
The Urban Redevelopment Authority’s (URA) Q1 data showed a 7.2 per cent quarter-on-quarter increase in the overall rental index for private homes. This followed a 7.4 per cent growth in the previous quarter.
Year on year, the rental index for Q1 2023 was up 33.4 per cent.
Notably, Q2 saw the sale via auction of four strata-titled industrial units, with a total sale value of S$4.78 million.
This includes two units at 60-year leasehold Enterprise Hub in District 22 (Jurong, Boon Lay), which transacted at S$1.02 million each, and one at 60-year leasehold Midview City in District 20 (Bishan, Ang Mo Kio) for S$850,000. The fourth was a unit at freehold Tong Lee Building in District 13 (Geylang, Potong Pasir), which changed hands at S$1.89 million.
“Investors are displaying growing acceptance towards leasehold industrial properties with shorter remaining lease durations, typically 30 to 60 years,” said Tan.
This is likely due to their “high risk tolerance” as financial markets remain volatile, she said.
There were also two sub-sale transactions in Q2 that were made below their original prices – a 732 square foot (sq ft) unit at freehold luxury condo One Draycott was sold for S$2.2 million, or half a million dollars less than its original price of S$2.7 million.
The other, a 538 sq ft unit at 99-year leasehold The Essence, transacted at S$700,000, slightly lower than its original price of S$760,000.
Sub-sales are secondary market transactions that occur before a condo project is completed.
Still, Knight Frank head of auction and sales Sharon Lee noted that these transactions may not necessarily be distressed sales.
“Sometimes, owners might sell (the current unit) at a lower price because they may have bought another unit, so they need to sell it so as not to incur the Additional Buyer’s Stamp Duty (ABSD),” she said.
The units could also have been sold to buy another condo unit at a cheaper price, said Lee. In which case, the owners may not mind selling it for a “much lower price”, since the savings made from the other transaction could be larger than any loss.
Furthermore, it would be difficult to conclude that these transactions are distressed sales without knowing the condition of the home or the owner’s financial situation, she added.
Joseph Wong, OCBC head of consumer credit risk management, highlighted that the number of property foreclosures by the bank over the past three years has been “low and stable”.
Going forward, Edmund Tie’s Tan believes that mortgagee listings might increase, but only further down the road.
“On the back of April’s (property cooling) measures and the continued increase in interest rates, coupled with the rental market beginning to slow down in Q2 2023, the increase in the number of mortgagee listings may only be visible in 2024, since there is usually a time lag between banks repossessing the properties and putting them up for auction,” she said.
For now, rental rates remain buoyant and the secondary market “healthy”, so owners can still sell their properties in the open market “very quickly”, said Tan.
She added that there might be an increase in interest in commercial properties, since these transactions will not incur ABSD.
“Plus with the increase of family offices in Singapore, the strata office market will be seeing more demand that is further supported by the lack of supply.
https://www.businesstimes.com.sg/property/distressed-home-sales-fall-q2-despite-continued-bankruptcy-pressure