Properties put up for auction by owners surge 68%

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Published December 29, 2006

Properties put up for auction by owners surge 68%

But mortgagee sales dive 38.8%, helped by an improving economy

By KALPANA RASHIWALA


(SINGAPORE) It's like a tale of two cities in the Singapore property auctions market. While the number of properties put up for auction by owners has jumped 68 per cent this year to a record 600, the number of properties put under the hammer by mortgagees fell 38.8 per cent this year to 1,418, according to latest figures issued yesterday by Colliers International.

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The property consultancy attributed the decline in the number of properties auctioned off by lenders to a more upbeat economy, buoyant property market and high employment rates.

Colliers said the growing trend for owners to put up their properties at auction, shows that they are increasingly recognising this as an efficient way of selling, especially for prime properties like Good Class Bungalows and even prime development sites.

Colliers also said that the total value of properties actually sold at auctions has jumped 49 per cent from about $213 million in 2005 to $318 million this year.

This is the highest level seen since 1999, when $409.5 million worth of properties were knocked down to the highest bidder. The surge this year was contributed largely by the record sale of 12 bungalow land parcels at Sentosa Cove in August for a total of $86.34 million.

Knight Frank, which also released its auctions report yesterday, offered a further reason for this year's strong auction sales - increased investor interest in apartments believed to have collective sale potential.

'They are usually in mature developments that are more than 10 years old, strategically situated in prime locations and are not built to their full development potential as allowed under the new planning regulations in Master Plan 2003.

'Some examples of such auction transactions include a unit in Tulip Garden which was transacted at $1.73 million, a high-end penthouse unit at Silver Tower in Cairnhill sold for $6.12 million, a $1.38 million studio apartment in The Beaumont and a Braddell Heights apartment,' Knight Frank observed.

Generally, these properties were knocked down at a premium compared to recently transacted units in the development, indicating that these buyers have priced in an en bloc premium for these units, Knight Frank said.

The firm predicts that the number of properties put up for auction by owners in 2007 is expected to further catch up with the number of mortgagee properties that go under the hammer. It also suggested that following the successful sale of highly sought-after penthouses at Marina Bay Residences earlier this month through a closed tender, there is a possibility of developers exploring other sales modes such as auction to obtain the highest prices for their properties.

In its report, Colliers highlighted that auction has also started to gain popularity among owners trying to find buyers in the subsale market for uncompleted properties in highly sought-after projects such as The Sail @ Marina Bay, The Arc at Draycott and The Berth by The Cove.

However, the numbers so far have been small. Fewer than 10 such units - or just 0.5 per cent of the total 2,018 properties put up for auction this year - went under the hammer, according to Colliers International executive director and auctioneer Grace Ng. None of these properties was actually sold during auctions, although some may have changed hands afterwards through private treaty deals, she added.

'Most owners will do the actual transaction through private treaty but will use auction as a platform to generate publicity for their properties and source for buyers,' Ms Ng said.

Colliers said the biggest percentage decline in mortgagee properties going to auction was in the office sector, as many owners who were in default with their bank loans were able to find buyers in the open market, thanks to the current shortage of office space.

More home owners opt to sell their homes at auction

By Joyce Teo - Dec 31, 2006
The Straits Times


THIS year's improved economy and property market prompted more home owners to sell their properties at auction - regarded as a hallmark of a strong property market.

Moreover, the value of total auction sales hit a seven-year high, although the total number of auctions, including mortgagee auctions, fell, consultants said.

However, in terms of home owner sales, a record 600 properties went to auction this year, up nearly 68 per cent from 358 properties last year, said consultancy Colliers International.

Of these, 43 properties were sold for $129.5 million in total - nearly double the $68.4 million in such sales last year.

Colliers executive director Grace Ng said these included uncompleted properties put up for sale by recent buyers at sought-after projects such as The Sail @ Marina Bay, The Arc at Draycott and The Berth by the Cove.

Some of these properties might have been sold via private treaty after the owners generated enough publicity and found buyers for their units at the auctions.

'From 1995 to 1996, when the market was hot, buyers also put up uncompleted units for auction. These included ones in The Blossomvale and Maysprings,' said Ms Ng.

'Next year, we expect more owners to use auctions to sell uncompleted units.'

Developers, too, used auctions as a yardstick to test market sentiment and set benchmark prices for prime properties, consultants said.

Sentosa Cove managed to set a benchmark price of $1,039 per sq ft for its seafront bungalow plots through the auction mode.

More recently, the penthouses in Marina Bay Residences were sold at record prices in a closed tender.

Consultants believe that more developers might be exploring other modes of sale, including auctions, to get the best price.

The Inland Revenue Authority of Singapore also adopted the auction method to sell sites to recover unpaid property tax this year.

This shows that the transparent auction method provides good exposure and helps to get the best price, said Knight Frank's executive director for auctions, Ms Mary Sai.

Looking ahead, she said, a wider variety of properties could be made available in the auction market as vendors' confidence in this mode increases.

About 175 properties were sold at auction this year, up from 163 last year.

Sales value reached a high of about $320 million - 'a level not seen since the last market peak in 1999', said Ms Sai.

The rise was helped by higher bids for apartments seen to have collective sale potential.

Notable among these sales was a penthouse unit at Silver Tower in Cairnhill, where four bidders drove the price to $6.12 million, way above its $4.5 million valuation. That was in late August, about a month before CapitaLand agreed to buy Silver Tower.

Still, repossessed properties make up the bulk of auction sales, though the number of such properties has fallen this year given a better economy.

Apart from declining loan defaults, mortgagors facing cash flow problems were able to dispose of their properties on the open market before bank foreclosures, said Ms Sai, explaining the drop in mortgagee's sales.

Other properties that were auctioned off included landed homes, office units, shophouses and industrial properties.