http://www.businesstimes.com.sg/real...ies-in-jan-feb

Mortgagee sales lift number of auction properties in Jan-Feb

JLL figures show 114 properties put up for auction in first 2 months of 2015, up 52% from 2014 and 58% more than 2013

By Kalpana Rashiwala

[email protected]@KalpanaBT

5 Mar


A TOTAL of 114 properties were put up for auction in the first two months of this year, up 52 per cent from 75 properties that went under the hammer in the same period last year and 58 per cent more than the 72 properties in the first two months of 2013, according to figures from JLL.

The increase was driven by a big jump in properties put up for sale by mortgagees (or lenders). In January-February 2015, the figure was 39 compared with 10 in January-February 2014 as well as 10 in January-February 2013.

JLL's analysis also showed that there were eight successful auction sales totalling S$30.78 million in the first two months of this year, of which seven properties (fetching S$16.15 million) were mortgagee sales.

The sole owner sale was a row of five shophouses at Teck Chye Terrace in the Upper Serangoon area - that sold for S$14.63 million, after receiving more than 40 bids from the opening bid of S$11.8 million at Colliers' auction in January.

The two-storey shophouses are fully tenanted, with shops or eateries on the ground level and residences on the upper level, generating a monthly rental income of S$36,850. This translates to a gross yield of slightly over 3 per cent on the transacted price.

The mortgagee properties that found new owners at auctions this year include a 3+1 bedroom 1,755 sq ft apartment on the 18th floor of Pearl Bank Apartment (on a site with 54 years' balance lease), which sold for S$1.35 million, and a freehold 517 square foot one-bedder at Estilo in Wilkie Road which fetched S$800,000. Both were sold at DTZ's auction in January.

In the same month, two freehold landed homes along Eng Kong Drive in the Upper Bukit Timah vicinity in District 21 found new owners at Colliers' auction. A three-storey intermediate terrace house was sold at S$2.42 million while a two-and-a-half storey corner terrace house transacted at S$3.3 million.

Other successful mortgagee sales at auctions in the first two months include a 1,389 sq ft three-bedroom unit on the ground floor of Ville Royale along River Valley Road, which fetched S$1.83 million; a four-bedroom apartment on the 17th floor of The Grange that went for S$4.15 million; and a four-bedder on the 22nd floor of Twin Regency in Kim Tian Road, which fetched S$2.3 million. All three are freehold and were sold at JLL's auctions.

Auctioneers observe an increase in the proportion of residential properties that have gone under the hammer in the past one and a half years. This is partly due to a reduction in commercial and industrial properties emerging at auctions due to reduced investor interest following the introduction of total debt servicing ratio in late-June 2013, explains Colliers International deputy managing director and auctioneer Grace Ng. "The increase in completions of condo/apartment projects has also led to the rise in the number of residential properties put up for auction."

Auctions are conducted once a month by each of the four major auction houses, and attendance at these events has also swelled. Said Ms Ng: "Ever since March/April 2014, the crowd at our auctions has picked up to around 150 from 60-70 in 2013 and early 2014. The increase is due to more people tracking the market closely in the search for attractive buys."

Mok Sze Sze, head of auctions and sales at JLL, said that since Q4 2014, attendance at the group's auctions has risen to 100-120 per auction, compared with 50-60 at each auction in the first nine months of last year. "Both owners and mortgagee banks are using auction as a platform to sell their properties because it gives them wide exposure and upon successful sale at auction, a 10 per cent deposit is paid, without a cooling-off period. On the demand side, we're also seeing more genuine buyers attending auctions and they are willing to bid when prices are at the correct level."

Ms Mok predicts that the number of mortgagee properties surfacing at auctions will continue to climb by 20-30 per cent this year after surging more than five times last year to 150 - from 28 properties in 2013. "With the potential rise in interest rates and credit tightening expected from the middle of this year, as well as continued pressure on rents from a housing oversupply, borrowers may have difficulty servicing loans," she added.

Among the properties coming up for auction this month are a freehold two-storey intermediate terrace house at Jalan Kemboja near Potong Pasir MRT Station, with indicative pricing of S$2.3-2.4 million; and a 592 sq ft apartment at The Plaza on Beach Road on a site with about 52 years' balance lease (with a price tag of around S$680,000). Both are estate sales and will be featured at Colliers' auction on March 25.

Those keen on shophouse properties will have a few choices at the same event. Three adjoining shophouses at 4, 6 and 8 Belilios Lane in Little India, on a site with 79 years' balance lease, carry a price tag of about S$8.7 million, according to market watchers. The properties are tenanted to pharmacy and beauty outlets drawing a total monthly rent of S$20,500; this translates to 2.8 per cent gross yield.

Colliers will also be auctioning a two-storey freehold shophouse in Tembeling Road on a residential-zoned site priced at around S$3.5 million. The property is tenanted with a ground-floor shop and a residence above. Both shophouse properties have been put up for auction by their respective owners.

Buyers eyeing a condo unit on Sentosa Cove could head to JLL's auction later this month, where there will be a mortgagee sale of a 4,133 sq ft duplex penthouse at the Seascape. The indicative pricing of S$9 million works out to S$2,178 psf.

Also on offer at the same auction will be a factory on a sprawling site of 117,227 sq ft at 1 Benoi Place with about 11 years' balance lease. The site is zoned for Business 2 use and has a 1.4 plot ratio, of which only half has been tapped by the existing development. The indicative price is S$12-13 million. This is an owner sale.