Published September 17, 2009

Q3 investment sales up 13%; Ghost Month auction sales soar

In both cases, the residential sector accounts for the biggest share


PROPERTY market sentiment continues to ride high, with preliminary data showing third-quarter investment sales up by 13 per cent from Q2. Q3 data to date shows investment sales totalled $1.83 billion, Jones Lang LaSalle (JLL) said yesterday.

Separately, Colliers International said that 14 properties have been auctioned for a total of $25.92 million during the Hungry Ghost Month - the highest amount in three years. Auction sales surpassed last year's $22.75 million, a significant $13.81 million of which came from four Singapore Land Authority sites.

Investment sales rose in the latest Q3 as the residential market continued to flourish. The sector accounted for 52 per cent of total investment sales, or $958 million. For instance, 24 Good Class Bungalows were transacted for a total of $413.5 million. And there were 47 other landed residential transactions worth more than $5 million, for a total of $408 million.

The GCB market has seen increased activity as more owners put their property up for sale to cash in on current high levels of interest and prices.

In a sign of the tougher economic times, most investment transactions in Q3 were concluded below $100 million. The exceptions were two large commercial transactions involving real estate investment trusts (Reits). Suntec Convention Centre was injected into the ARA Harmony Fund, a fund in which Suntec Reit has a 20 per cent stake, for $235 million. And K-Reit bought six floors of its partly owned Prudential Towers for $106.3 million.

Boutique developers snapped up bite-size land parcels and developments to beef up their holdings in Q3. And JLL head of investments Stella Hoh expects this to continue.

JLL says in its report: 'The encouraging performance of investment sales is testament to the liquidity still available in the market. Along with improving economic sentiment, the market is expected to improve, with more transactions expected by the end of the year.'

Grace Ng, deputy managing director (agency and business services) of Colliers International, said it is encouraging that auction sale amounts have been on the rise since March, boosted by signs of economic recovery, improving market sentiment and the buoyant stock market. 'We even saw a steady stream of buyers and investors at auctions during the Hungry Ghost Festival, which is traditionally a lull period,' Ms Ng said.

As with the investment sales data from JLL, the residential sector contributed the biggest share of total sales value at auctions.

Colliers said: 'Mirroring the trend in the general property market and buoyant sales at residential launches, the auction market similarly chalked up $18.98 million of sales from the residential sector.

'Not only is this almost two-thirds of total sale value, it is also the highest value registered for residential sales during Hungry Ghost Festival in the past three years.'

Ms Ng said: 'Going forward, we believe the residential sector will remain the most active sector as buyers and investors seek out condominiums and landed homes at auctions.

'The recent withdrawal of the interest absorption scheme and interest-only housing loans will have minimal impact, as these schemes are not applicable to the secondary market.

'However, it is expected that sales will taper off in the final two months due to year-end school holidays and festivities.'