Residential auction market cools down

BT April 5, 2012


Interest in residential property auctions fell in the first quarter of this year, from 14 in 2010 and five in 2011 to just one in the last quarter.

Out of the 84 properties put up for auction in Q1, three were sold — one of which was a residential property, while the other two were a factory in Woodlands and a petrol station along Jalan Ahmad Ibrahim.

This translates to a success rate of around four percent, a sharp contrast to the success rate of around 18 percent and 14 percent in 2010 and 2011 respectively.

Mok Sze Sze, Head of Auctions at Jones Lang LaSalle (JLL), said the notable drop in interest for residential properties put up for auction could be attributed to recent global economic uncertainties as buyers prefer to wait for a clearer sign before making deals.

“The property buying market seems to have come off the healthier sales rate of 10 percent last quarter, which is no surprise given the weaker overall sentiment, but there has still been strong demand for industrial and commercial properties,” she noted.

Meanwhile, industrial and commercial property acquisitions are picking up, given that the sectors offer greater access to funds via higher loan-to-value (LTV) ratios and yields, said JLL.

“We expect industrial and commercial properties to continue their strong showing as we see a return of primary demand from occupiers/operators in the auction market,” said Mok.

“Auction sales of private residential properties are likely to pick up pace later on this year, as both buyers and sellers realign their expectations following a clearer market direction since the cooling measures implemented in December 2011.”