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Thread: More owners of properties with en bloc potential taking the auction route

  1. #1
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    Default More owners of properties with en bloc potential taking the auction route

    More owners of properties with en bloc potential taking the auction route

    By Daryl Loo, Channel NewsAsia | Posted: 11 July 2007 2138 hrs

    SINGAPORE : The en bloc fever is spreading to the auction room.

    According to auctioneers, more owners are labelling their properties as having en bloc potential, and putting these up for public bidding.

    Unheard of in auction rooms two years ago, such properties now account for nearly a fifth of every auction session.

    More owners are turning to auctions to sell their properties.

    In the first half of this year, 420 properties were sold in this manner, up 60 percent from the same period a year ago.

    And industry players say properties labelled as having en bloc potential draw the biggest crowds and the largest bids.

    Grace Ng, Deputy Managing Director, Colliers International, said: "There are more owners putting their properties for sale via the auction mode. Competitive bidding is also more prevalent in auctions, especially when you have a property with en bloc potential in the room. The attendance actually goes up from the normal 100 to more than 200, jam-packing even up to the corridors. Right now, because of the en bloc craze, anything that sits on a big plot of land, anything that is old but in a good location, they will deduce that there's en bloc potential."

    In an auction held on Wednesday, an office in Peace Centre drew nine competing bids and was sold for S$2.5 million, 32 percent above the opening bid.

    The commercial building was put up for collective sale in April.

    But market watchers say buyers should be aware of the risks when buying into the en bloc craze.

    Ms Ng said: "I think the buyers are mindful of the risk that they are entering, particularly since the en bloc market has scaled new heights and record after record prices are achieved. In general the prospect will only want to buy if there's a substantial premium to be made over the seller's asking price.

    "For instance if the seller is selling at S$1 million, and the en bloc calculated price that he can get is S$1.5m for the buyer, the buyer may make the decision to buy. But if the seller is selling at S$1.4 million, he may not want to buy at that price."

    En bloc property deals are estimated to hit over S$10 billion this year, well above the S$7.8 billion record set for 2006. - CNA/ch

  2. #2
    DrMinority
    Guest

    Default Re: More owners of properties with en bloc potential taking the auction route

    I wonder if shilling happens in these auctions and whether there are checks in place. This happens a lot in the online auction sites like ebay.

    How it works is this:-

    Say you have a unit you want to sell and it's from Neptune Court. You put it in at $1million and you ask your cousin to attend the auction. Someone bids 1.1m, your cousin bids 1.2m. Another person bids 1.3m, your cousin bids 1.4m. By doing this you're artificially inflating prices. If your cousin wins the bid, I suspect he may either opt to pull out in which case the win goes to the next highest bidder, or he takes it, 'pays' the owner, and the loss is probably auction fees. But the owner might then use the auction bidding price as a benchmark to sell on the open market, saying that there's so much interest that this auction price should be the minimum he'll now let go of the unit etc.

    Happens a LOT on ebay and it's hard to monitor and regulate such shilling. Wonder if this happens on the Singapore auctions too?

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