More buyers snap up properties without viewing first

June 14, 2007

More buyers snap up properties without viewing first

Market boom fuelling increase in speculative transactions for condos and office space

By Nicholas Fang


SHELLING out $1 million or more for an apartment or office space sight unseen might sound absurd, but a growing number of buyers caught up in the recent property boom are doing just that.

Rocketing prices over recent months are behind the practice, with buyers - fuelled by a mix of greed, panic and euphoria, according to one expert - desperate to snap up speculative deals that might yield a tidy profit in a short time.

The process, known as flipping, in such a competitive market is leading more people to forgo the viewing part in their haste to seal the deal.

PropNex senior division director Eric Cheng said: 'Since last June, I have noticed that the number of people buying properties without viewing them has gone up from one in 10 to about 2.5 in 10, and I expect this to grow to three in 10 by the end of the year.'

He added that such transactions have largely been for condominiums, apartments and office space, and not so much for landed property and Housing Board flats.

'Apartments and condominiums tend to be pretty uniform within each development so potential buyers have a good idea of what they are getting if they are familiar with another unit in the same project,' he said.

'Landed properties are not like that. The HDB market, also, has not been that exciting.'

Knight Frank director of research and consultancy Nicholas Mak said it was hard to pin down exact numbers of such speculative transactions but anecdotal evidence suggests they had gone up in the past six to 12 months.

'Based on statistics we are getting, there has been more speculation at the high end of the market, presumably because the people who invest in that sector have the financial resources to afford the high prices,' he said.

'In that sector, the number of transactions has gone up tenfold since 2003. On average, there are approximately 600 to 700 transactions in the high-end luxury market each quarter and we estimate that 20 per cent of these have resulted in flipping.'

Mr Cheng himself has bought five properties - two offices and three residential units - over the past year without having first seen what he was paying for.

But he does not believe he was taking undue risks: 'I knew the areas the properties were located in and I had information on the history and prices of past transactions. People should definitely do their homework first.'

Savills Singapore director of marketing and business development Ku Swee Yong said most sight-unseen buyers had to be seasoned investors.

'I believe that most of them know the areas in question very well and are able to look at the floor plan of an apartment and decide whether or not they want to buy it,' he said.

'In many cases, these are rich individuals who do not want to mess with the crowds when projects are launched.'

Collective sale fever was also behind many of such purchases, he added.

Mr Ku cited friends who owned units at Bayshore Park and Mandarin Gardens who had been offered cheques from buyers keen to cash in on the rumoured collective sale potential of those properties.

Mr Cheng expected the property boom, as well as the trend of properties being bought without viewing, to continue for another three years.

'There is definitely room to grow in the Singapore market compared to the rest of Asia and there is scope for expansion,' he said.

However, Mr Mak sounded a warning about the buying frenzy in the market: 'The current rush is a mix of euphoria, panic, optimism and greed. It is high-risk behaviour and speculators have been stuck and unable to unload their properties.'

However, Jones Lang LaSalle's South-east Asia head of research, Dr Chua Yang Liang, believed the trend can be a positive one for the overall market.

'As long as these transactions are contained and do not lead to inflationary pressure on overall home prices, it is a healthy lubricant for the property market engine,' he said.

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sometimes, it is not because buyer don't want to view, but because viewing is not available eg. tenant refuse viewing or tenant is overseas.

Do you know the reason why?

Location location location.

Because property is all about location, actually all you need is a street directory.

I would buy an attap house sitting on good freehold land in Orchard if you gave me a good price for it.

Charge!
Buy buy buy without viewing!