Auctions fast becoming more popular with both property owners and buyers

“Going once, going twice, sold!” This is a phrase commonly heard at property auctions in Singapore, which have – over the years – gained favour with both sellers and buyers.

Auction houses, such as Colliers International, DTZ, Jones Lang LaSalle and Knight Frank, typically conduct auctions on a monthly basis in a hotel. About 200 people on average show up at each session, comprising both local and foreign buyers.

The stigma of auctions associated with properties that have been repossessed by banks has slowly eroded over the years, as witnessed by the decreasing number of such properties surfacing at auctions versus the increasing number put up by property owners.

In 1H 2010, mortgagee sales accounted for a mere 14 per cent of the total number of properties being put up for auction. The rest were sales by owners. This is a stark contrast to the 50-50 split between mortagagee and owner sales seen in 1998.

The paradigm shift to using auctions as a mode of sale in Singapore has become more prevalent today, with both sellers and buyers acknowledging that the auction process is transparent and more efficient.

In fact, property auctions are also increasingly gaining favour with developers and foreign buyers.

During the property boom years in 2006 and 2007, developers – including Sentosa Cove and Tuan Sing Holdings – successfully sold their land parcels and new residential units to an international audience via auction sales.

Not only did these developers achieve record prices, they also gained great exposure for their projects and garnered high participation from foreign purchasers hailing from Australia, Hong Kong, India, Indonesia and Malaysia.

Property Auctions Increase The Probability Of Sale

The increasing trend of property owners opting for auctions as the mode of sale can be attributed to a number of reasons.

Typically, sellers have three sale opportunity windows: 1) Before the scheduled auction date, if the price meets the seller’s expectations; 2) On the auction day; and 3) After the auction date, through private treaty negotiations.

Before a scheduled auction, auction houses would market the properties to the contacts in their database. This is accompanied by an intensive two-to-three-week advertising campaign to reach out to prospective buyers. Hence, property owners can be assured that the reach to prospective buyers is maximised.

The fixed auction date will encourage genuine buyers to do their due diligence in researching the property and work out their financing without procrastination, so that they can reach a decision by the date of auction.

Competitive bidding at the auction also enables the seller to obtain the best price for his property.

If the bid price meets the minimum reserve price set by the seller, a confirmed sale then takes place on-site with the knockdown of the hammer, followed by a down-payment (usually five per cent of the sale price for residential properties) and the signing of the sale and purchase agreement.

Hence, the probability of a sale through auction is higher. Given the trend that more vendors are using auctions as a method to sell their properties, auctions will continue to gain popularity in Singapore.

Popular Property Types Seen at Auctions

Mass market apartments that are well located in established areas – including Bedok, Changi, Jurong, Serangoon, Telok Kurau and West Coast, among others – are generally very popular with upgraders.

Buyers are attracted to older properties in the secondary market due to their large floor area, compared to new developments which are much smaller in size.

Some properties successfully auctioned off in the first half of the year included apartments in Chiltern Park (Serangoon), Changi Green (Changi) and The Warren (Choa Chu Kang), which were sold at $1.015 million, $918,000 and $830,000, respectively.

Landed properties are in demand due to their limited supply in land-scarce Singapore. Houses located in the Bukit Timah vicinity, such as Watten Estate and Hillcrest, are the most sought after due to their proximity to reputable schools and the Circle Line. Four semi-detached houses at Hillcrest Road and two at Watten Estate were sold for between $3.32 million and $3.53 million each.

What Are Popular In 2010?

Properties with en bloc potential

With the collective sale market showing a recovery, older properties with en bloc potential are once again back on buyers’ radar.

Apartments in Windsor (Upper Thomson Road) and Greenlodge (Toh Tuck Road) were sold for between $1.08 million and $1.28 million earlier this year.

High-end properties

High-end properties are making a comeback, propelled by the return of foreign buyers and the opening of the two Integrated Resorts (IRs).

Five high-end apartments worth a total of $13.38 million were sold at auctions in the first half of the year. They included a unit at Oceanfront (Sentosa Cove), which was sold for $3.15 million.

The most expensive luxurious apartment sold by far this year was an apartment in D’Grove Villas, which was knocked down at $5.42 million.

High-end properties in developments that have the potential to be put up for en bloc sale, such as Claymore Plaza Apartment (Claymore Hill), D’Grove Villas (Orange Grove Road) and The Beaumont (Devonshire Road), were sold at auctions this year.

Popular Property Types To Watch For In The Near Future

Inner city apartments

Investors are turning their attention to apartments such as The Sail (Marina Bay), and Icon (Tanjong Pagar) – especially those in the region of $1 million to $1.5 million.

Their close proximity to the two new IRs and downtown area as well as ease of access to other parts of Singapore have made them highly rentable and they generate attractive yields.

New properties which are nearing completion or have obtained Temporary Occupation Permit (TOP)

Such properties appeal to both owner occupiers and investors due to their near-term rental generation ability, as well as near-term owner-occupation opportunity.

By Grace Ng, deputy managing director (Agency and Business Services) and Auctioneer at Colliers International.

Property auction sales up

Auction sales in Singapore grew for the first half this year, totalling about $87 million. Property consultant Jones Lang LaSalle’s Auction House reported more than 80 per cent of all listings were put up for sale by owners.

The increase in the number of properties for sale by auction is due to a change in mindset – many now see it as an effective mode of sale, the firm said.

Auction attendances have also increased on-quarter, with June seeing attendance rates of more than 120 punters.

Jones Lang LaSalle expects the third quarter to see maintained levels of owner-sale listings as people return from holiday.

Source : Today – 6 Jul 2010

Property auction market up 20% in H1

The Singapore property auction market rose 20 per cent on-year in the first half of this year to S$87 million, according to property consultants Colliers International.

A total of 440 properties were put up for auction, of which 378 properties were from property owners while only 62 were mortgagee sales.

Colliers said the sharp fall in the number of properties put up for mortgage sale is a reflection of the vastly-improved financial position of mortgagors.

April saw the highest value from auctions when 12 properties changed hands at a total value of more than S$24.4 million.

The lull period was in May, when only two properties were sold for S$6.89 million. This could be due to concerns over European debts, as well as the tension between North and South Korea which sent jitters through the stock market, said Colliers.

It added that buying interest at auctions will also remain keen as liquidity in the market is high and more investors are looking to real estate to hedge against inflation.

The sale of seven landed properties contributed 23.1 per cent or S$20.08 million to auction transactions during the six-month period.

Four out of the seven landed properties are located in the Bukit Timah vicinity.

Other types of properties sold in auctions are retail properties, which contributed S$20.07 million or 23.1 per cent to total sales; as well as high-end apartments which contributed S$13.38 million or 15.4 per cent.

Source : Channel NewsAsia – 30 Jun 2010

Owners turning to auction sales

Source : Sunday Times – 27 Dec 2009

Next year, there will be even fewer mortgagee sales at auctions as the economy continues to improve. Yet more owners are expected to go the auction route when it comes to selling their properties.

Jones Lang LaSalle said it expects to see more owners choosing to do so in the year ahead.
It also believes the number of mortgagee sales – or forced sales of repossessed properties – will fall further as the economy continues to improve.

Colliers International noted that more owners have taken to using auctions as a mode of sale due to its convenience.

This method has a relatively structured marketing process, a fixed sale date as well as a pre-arranged viewing schedule, it said.

‘Additionally, owners would be able to achieve good prices as a result of competitive bidding at auctions, especially if the market is buoyant.’

The bet is on a stronger property market next year. This means that mortgagee sales may not be done at very low prices.

‘A mortgagee sale does not necessarily mean a cheap sale,’ said Knight Frank auctioneer Mary Sai.

‘Next year’s mortgagee sales will be done at the prevailing market rate then, and prices may have inched up a few more per cent from this year’s level,’ she said.

Colliers expects high-end prices to recover next year as Singapore steps out of the global recession and opens its two integrated resorts. The sale of more high-value properties will prop up the total sale value at auctions next year, it said.

Mass market prices have recovered, while high-end prices are still a distance from the boom levels of early last year.

Nevertheless, buyers may still be able to find what they want at an auction.

As apartments get smaller and smaller these days, Colliers International is predicting that large homes will increase in popularity at next year’s auctions.

Residential properties that are perceived to be ‘value for money’, such as landed homes with big land areas or large apartments, would continue to be favoured by buyers, said its deputy managing director (agency and business services) and auctioneer Grace Ng.

But these need to be at bargain prices as terrace houses or small bungalow plots are typically popular with owner-occupiers.

The commercial sector, experts said, may present some good buys.

Colliers said that given ample liquidity in the market, shops and shophouse units with attractive rental returns will remain highly sought after.

Said Ms Sai: ‘Strata shops and offices are something to look out for. If rentals have declined, prices will likely fall in tandem.’

In the past, buyers wanted a gross rental yield of 6per cent to 8 per cent for a commercial property, she said.

‘Now that the cost of borrowing has fallen, some short-term buyers may want to buy a commercial property that gives a smaller yield of 4per cent to 5 per cent,’ she added.
Indeed, said Ms Ng, tenanted shop and shophouse units with average yields of about 5 per cent have attracted investors at auctions this year, given that bank interest rates are at a low of less than 1per cent.

In comparison, the average residential yield is about 3per cent to 3.5 per cent.

Landed homes typically offer an even lower yield of 1.5per cent to 2 per cent, though the potential for capital appreciation may be greater, experts said.

Number of mortgagee sales at 12-year low

Source : Straits Times – 18 Dec 2009

MANY expected to see a surge in the number of home loan defaults, what with the worst recession in Singapore’s history and the rising tide of jobless people struggling with mortgage instalments.

Nothing, it turns out, could be further from the truth. The number of properties put up for mortgagee sale fell to a 12-year low this year, said a report by Colliers International yesterday.

Only 195 of the 927 properties put up for auction this year were mortgagee sales or forced sales of repossessed properties. This is a 25 per cent drop from the 260 properties last year, it said.

When banks repossess properties where the homebuyer has defaulted, they invariably choose to sell at auction as that is a fast and transparent mode of sale.

The latest low figures are a far cry from the situation in 1998 when the Asian financial crisis hit home. A total of 452 properties were put up for mortgagee sale that year, it said.

‘The low number of mortgagee sales could be due to the introduction of the Government’s Jobs Credit scheme which stabilised the employment market; which, in turn, provided some home owners with the ability to service their monthly mortgage loans,’ said the firm’s deputy managing director (agency and business services) Grace Ng.

‘Additionally, buoyant sales experienced in the primary market and a steadily improving economy boosted sentiments in the secondary market, hence enabling owners to dispose of their properties and evading the need for banks to foreclose their properties.’

The Colliers report said that 118 properties worth $168.39 million were auctioned off this year, slightly more than double the $83.67 million done last year.

Residential sales at auction this year totalled $88.35 million, up from $25.23 million last year, as upgraders were encouraged by the more positive economic sentiments since March as well as low housing loan rates.

This year, there was competitive bidding for old semi-detached houses with large land areas, noted Ms Ng.

The residential sector was the star performer as usual, but the value of non-residential properties auctioned off this year has more than trebled to $101.8 million to date, said another consultancy Jones Lang LaSalle in a statement yesterday.

Its head of auctions Mok Sze Sze said this can be attributed to the fact that investors are attracted to the higher rental yield from non-residential properties as opposed to a residential one.

Looking ahead, Ms Ng said more high-value properties are expected to be sold next year, possibly bringing the total value of properties sold at auction to more than $200 million.

Property auction sales double to $168.4m

Source : Business Times – 18 Dec 2009

Number of mortgagee properties put up for auction falls 25%

THE property auction scene is expected to continue sparkling next year, spurred by interest in the high-end residential market, says Colliers International. It says that the total value of properties sold at auctions may exceed $200 million in 2010, after the figure doubled this year to about $168.4 million from last year’s $83.7 million.

A total of 118 properties were sold at auctions in 2009, again up from last year’s 72.

The residential property was the star performer, accounting for about 52 per cent of total auction sales value.

Contrary to earlier expectations in some quarters, the number of mortgagee properties put on the auction block fell 25 per cent to 195. The figure includes other forced sales, for instance, by the Inland Revenue Authority of Singapore and management corporations.

‘The low number of mortgagee sales could be due to the introduction of the government’s Jobs Credit scheme, which stabilised the employment market. This, in turn, provided some home owners with the ability to service their monthly mortgage loans,’ says Grace Ng, Colliers deputy managing director (agency and business services) and auctioneer.

The number of properties put up for auction by their owners (including trustee sales) rose 10 per cent to 732, further testament to growing acceptance of auctions as a mode of selling property.

Mok Sze Sze, Jones Lang LaSalle head of auctions, says: ‘Owners are attracted by the competitive nature of the auction environment and the high chance of attaining an optimum price for their property.’

She expects to see more owners putting their properties on the auction block next year and, as the economy continues to improve, a further decrease in the number of mortgagee sales.

Colliers highlighted a more than 200 per cent jump in the sales value of residential and industrial properties sold at auction this year to $88.4 million and $20 million respectively. Older residential properties with large areas were popular for both landed and non-landed segments.

The sales value of retail properties transacted at auction rose from $34.6 million last year to $43.4 million.

This year’s auction tally of $168.4 million is about 59 per cent below the peak figures $409.46 million in 1999 and $407.43 million set in 2007.

Back in 1999, when the private residential property market staged a spectacular recovery after the Asian crisis, 27 per cent of 1,210 properties that went under the hammer were sold at auctions, according to Colliers’ analysis. This year, the 118 properties sold made up just 13 per cent of the total 927 properties put on the auction block.

Colliers’ definition of total number of properties put up for auction includes those withdrawn before auction or sold before/after the auction. However, the number sold refers only to those transacted at auction.

JLL jointly starts online property auction service

Source : Business Times – 17 Sep 2009

Jones Lang LaSalle Inc, the second biggest publicly traded commercial property broker, is joining Real Estate Disposition Corp to start an online auction service to sell commercial property and loans.

‘In a stagnant sales market where interested investors are limited, using an auction opens up a property to a viable buyer marketplace,’ Jay Koster, president of Chicago-based Jones Lang LaSalle’s capital markets practice, said yesterday in a statement.

Real Estate Disposition runs www.auction.com, a website focusing on residential property sales. The site has sold more than US$5 billion in assets since 2007, Jeffrey Frieden, chief executive of the Irvine, California-based company, said in the statement.

It will now also sell commercial property and related debt as well as bank- owned real estate, Guy Ponticiello, managing director at Jones Lang LaSalle, said in an interview.

Commercial property sales in the US will fall to the lowest level in 18 years as the industry endures its worst slump since the savings and loan crisis of the early 1990s, according to data from Real Capital Analytics Inc.

US commercial property values have plunged 36 per cent since peaking in 2007, as mortgage losses forced banks to restrict lending. Would-be buyers await defaults by investors who relied on debt to make purchase between 2005 and 2007, when prices were soaring.

The auction process is a way ‘to find truly where the pricing is’, Mr Ponticiello said.

The venture’s first online commercial auction will be for 100,000 square feet of office space in suburban Dayton, Ohio, owned by Procter & Gamble Co. The sale, set for Oct 15, includes two four-storey office towers that housed the company’s food division, he said.

JLL jointly starts online property auction service

Source : Business Times – 17 Sep 2009

Jones Lang LaSalle Inc, the second biggest publicly traded commercial property broker, is joining Real Estate Disposition Corp to start an online auction service to sell commercial property and loans.

‘In a stagnant sales market where interested investors are limited, using an auction opens up a property to a viable buyer marketplace,’ Jay Koster, president of Chicago-based Jones Lang LaSalle’s capital markets practice, said yesterday in a statement.

Real Estate Disposition runs www.auction.com, a website focusing on residential property sales. The site has sold more than US$5 billion in assets since 2007, Jeffrey Frieden, chief executive of the Irvine, California-based company, said in the statement.

It will now also sell commercial property and related debt as well as bank- owned real estate, Guy Ponticiello, managing director at Jones Lang LaSalle, said in an interview.

Commercial property sales in the US will fall to the lowest level in 18 years as the industry endures its worst slump since the savings and loan crisis of the early 1990s, according to data from Real Capital Analytics Inc.

US commercial property values have plunged 36 per cent since peaking in 2007, as mortgage losses forced banks to restrict lending. Would-be buyers await defaults by investors who relied on debt to make purchase between 2005 and 2007, when prices were soaring.

The auction process is a way ‘to find truly where the pricing is’, Mr Ponticiello said.

The venture’s first online commercial auction will be for 100,000 square feet of office space in suburban Dayton, Ohio, owned by Procter & Gamble Co. The sale, set for Oct 15, includes two four-storey office towers that housed the company’s food division, he said.

Hotel in Little India up for auction

Source : Business Times – 10th Sep 2009

TEKKA Hotel, comprising nine adjoining two-and-a-half-storey shophouses off Serangoon Road, will be put up for auction at an indicative price of $17 million to $19 million.

The refurbished pre-war property in Belilios Lane is on nine titles and has a 99-year leasehold tenure from March 8, 1995. It is in the Little India conservation area under the 2008 Master Plan and is zoned for commercial use. The hotel has 50 guest rooms and six retail and restaurant spots, spread over a gross floor area of 20,397 sq ft. An assumed price of $18 million would translate to about $160,000 per room. The shops on the ground floor are tenanted and fetch combined rent of $54,900 a month. The last tenancy expires on Sept 30, 2012.

Colliers International is auctioning the hotel on Sept 23. Its deputy managing director of agency and business services Grace Ng said that in line with Singapore’s aim to attract 17 million visitors a year by 2015, demand for hotel accommodation could spill over to city-fringe areas. Tekka Hotel is strategically located in a vibrant area with a rich cultural heritage, she said. And with more budget-conscious tourists from countries such as China, India and Vietnam, ‘budget hotels will be a popular choice’.

More shophouses are also up for sale. Colliers will also auction a four-storey freehold conservation shophouse in Geylang Road. The property has a gross floor area of 21,779 sq ft and there is potential to add another floor to the building.

DTZ, meanwhile, is auctioning two shophouses on Sept 22. One is a freehold two-storey conservation shophouse at Lorong Geylang, with an indicative price of around $2.4 million. The other is a three-storeyconservation shophouse in Mohamed Sultan Road, with an indicative price of around $5 million. Some freehold landed residential properties will also feature in Colliers’s auction. There is a 4,355 sq ft three-storey detached house and a 3,145 sq ft three-storey corner terrace house, both off Upper Bukit Timah Road.

There are also two semi-detached houses off Yio Chu Kang Road – a 3,960 sq ft two-storey five-bedroom unit, and a 3,850 sq ft two-storey four-bedroom unit.

What does a mortgagee sale mean?

Source : Sunday Times – 28 Jun 2009

Where do you see this?

In financial news articles, classified advertisements and auction houses’ list of properties on offer.

What does it mean?

A mortgagee sale takes place when a bank force-sells a property after it has repossessed it, when the borrower cannot pay his mortgage. The repossessed property is usually sold via an auction by the bank – and often as a last resort – to recover the debt of the defaulted borrower.

Why is it important?

Such forced sales can throw up great bargains for investors.

A surge in the number of repossessed properties is a sign that the economy is not looking good. It signals a worsening property slump.

For instance, the number of such properties shot up at auctions during the economic crises of 1986 and 1998, when many homeowners struggled to pay their mortgage instalments.

But this time round, the number of mortgagee sales has not risen.

So you want to use the term. Just say…

‘I have been monitoring auction houses’ list of mortgagee sales to see if I can get my hands on a real bargain.’

Auction sales surge in first half to $72m

Source : Straits Times – 27 Jun 2009

AUCTION sales have surged in the first half of this year, with the number of transactions dramatically higher than what was clocked up last year.

The numbers tell a story of a property market rapidly gaining in confidence, especially in recent months, according to consultancy Colliers International yesterday.

Sales in the first half reached $72.39 million. That is 61 per cent up on the $45 million recorded in the second half of last year, and 87 per cent higher than the $38.64 million racked up in the same period a year ago.

Much of the pickup happened in the second quarter, after the stock market rallied and sentiment improved. This month has seen strong sales of $24.7 million, compared with the miserable $3.6 million sales in January and $1.4 million in February.

Jones Lang LaSalle, which conducted the last auction for this month yesterday, said it sold four properties worth $11.29 million, including a $3.45 million Leonie Towers apartment.

Sales were lacklustre in the first quarter because buyers had bid very low and opportunistic prices, said Ms Grace Ng, Colliers’ deputy managing director (agency and business services) and auctioneer.

The mood in auction rooms now is decidedly more upbeat, with sellers keen on repricing properties about 5 per cent to 10 per cent higher, said Knight Frank auctioneer Mary Sai.

But the increased expectations do not signal a clear price rise yet. ‘Prices were lagging behind the market so the sellers were moving up to match the market,’ Ms Sai said. ‘Those that we sold were mostly the $800,000 to $1 million types. These are the safe buys as mass market homes aren’t likely to retreat much.’

The buying mood has even carried over from mass market homes to some landed and high-end property, said Ms Ng. These include two apartments at The Clift worth $605,000 and $1.047 million.

Few mortgagee sales have occurred this year despite the weak economic climate. The 103 repossessed units on the block represented only about 23 per cent of total properties put up for auction in the first half. This compares with 28 per cent last year, 44 per cent in 2007 and 50 per cent in 1998.

The number is about half of what was put up during the Asian financial crisis in 1998.

In all, there were 54 homes sold through auction in the first half.

‘The continued low number of mortgagee sales could be partly attributed to financial institutions attempting to manage their distressed asset portfolio by giving property owners the opportunity to dispose of the property of their own accord,’ said Ms Ng. ‘There will be less contention over the sale price, as the price is determined through a consultation process with the owner.’

Ms Ng expects to see more mortgagee sales in the second half of the year due to the general lag time of approximately six months or more.

Ms Ng also expects the buying momentum to persist in the next few months, possibly leading average monthly auction sales to surpass $30 million in some months. That could send auction sales over $160 million for the year, almost twice the $83.67 million achieved last year, she said.

First-half auction sales top $72m

Source : Business Times – 27 Jun 2009

A STRONG showing at auctions this week raised the tally for properties sold under the hammer in the first half-year to $72.4 million – just 13 per cent shy of the $83.7 million for the whole of last year, based on figures compiled by Colliers International. The second quarter of 2009 saw a total $54.5 million of auction deals after a quiet Q1, with $17.9 million.

The momentum is expected to continue. Colliers’ deputy managing director and auctioneer Grace Ng predicts that full-year 2009 auction sales could exceed $160 million – almost twice the figure in 2008.

Jones Lang LaSalle, which yesterday conducted its last scheduled auction for Q2, saw four properties change hands for a total of $11.3 million. One was a 7,232 square foot vacant freehold plot in Fernhill Road that was sold for $6.4 million, working out to $632 per square foot (psf) of potential gross floor area. The Singaporean buyer is expected to develop the residential site, which can be built up to five storeys, for his family’s use, according to JLL’s head of auctions, Mok Sze Sze.

Another big-ticket item sold was a 12th floor unit in Leonie Towers, a freehold condo that is more than 30 years old. The 2,906 sq ft maisonette sold for $3.45 million or $1,187 psf of strata area. ‘The buyer is a company. We held two viewings for the property over the past week, and it attracted around 70-80 parties,’ Ms Mok said. The sheriff’s sale was held to recover a debt owed by the owner to two individuals. There is also an oustanding mortgage on the asset.

Residential properties accounted for almost half of the $72.4 million of auction sales in the first half, followed by industrial properties, with a 19 per cent share, Colliers’ analysis shows.

It noted that activity in the auction market picked up dramatically from late March, when the stock market rallied. ‘Based on historical observations, property auctions have always been an accurate barometer of market confidence, and are usually swift in reflecting any changes in market sentiments,’ the firm said.

Colliers also noted that 77 per cent of the 440 properties put up for auction in the first half were offered by their owners, leaving only a 23 per cent share for mortgagee sales. ‘Historically, from 1998 to 2006, the number of mortgagee properties always tended to be higher than the number of properties put up by owners. The trend started to reverse in 2007,’ said Colliers’ Ms Ng.

DTZ senior director and auctioneer Shaun Poh has noticed keen participation by property investors at his firm’s recent auctions. ‘Small investors are particularly aggressive in bidding for smallish apartments in the central area, for example, Icon, The Clift, even an old development like International Plaza,’ he said. ‘Generally, properties priced between $700,000 and $1.3 million tend to move very fast.’

Knight Frank executive director Mary Sai, another veteran auctioneer, said that attendances, as well as success rates, at auctions have gone up markedly since April.

‘However, there is a sense of caution among bidders. They don’t want to be overly financially stretched,’ she said. ‘A clever move by some bidders now is to make a counter offer to the auctioneer’s opening price. So they start within their comfort zone. Eventually, however, the bidding competition will draw out the true price level, often surpassing the opening price.’

Source : Business Times – 18 Jun 2009

They include Belmont Road bungalow, Fernhill Road site and condo units

As action in the property market drifts up to the high end, more top-notch properties are surfacing at auctions.

A good-class bungalow (GCB) on Belmont Road, a 7,000-square-foot freehold site on Fernhill Road and condo units at St Regis Residences, Leonie Towers and Gallop Gables are among properties that will go under the hammer next week.

The GCB at 62 Belmont Road has been put up for sale at an indicative price of $26 million to $30 million. This works out to $797 to $919 per square foot (psf) based on the sprawling site of 32,627 square feet.

The existing single-storey bungalow, which will be offered at Knight Frank’s auction on June 23, is more than 30 years old.

‘The property can be rebuilt into a new two-storey bungalow with a basement. And there’s space for a tennis court and swimming pool,’ says Knight Frank executive director and auctioneer Mary Sai.

Colliers International’s auction on June 24 will feature a recently renovated two-storey freehold bungalow with six bedrooms and a maid’s room at 2 Branksome Road, off Tanjong Katong Road.

The property is being offered at an indicative price of $9 million or $815 psf of land area, says Colliers deputy managing director and auctioneer Grace Ng. The bungalow has a swimming pool and Balinese-style decor.

A trustee sale of a 7,232-sq-ft freehold vacant site in Fernhill Road is indicatively priced at $6.5 million to $7 million, which reflects a unit land price of $641 to $691 psf of potential gross floor area (GFA). This excludes any development charge that may be payable.

The site is zoned for residential use with a 1.4 plot ratio – the ratio of maximum potential GFA to site area. It can be developed into a small apartment project or a landed housing development.

Jones Lang LaSalle (JLL) is auctioning the property on June 26.

Another property at the event will be a sheriff’s sale of a maisonette on the 12th floor of Leonie Towers, a freehold condo at Leonie Hill. The indicative price is $2.6 million to $2.8 million or $895-$964 psf of strata area.

The sheriff’s sale is being held to recover a debt owed by the owner, which is a company, to two individuals. The unit will be sold with vacant possession.

Colliers is also offering at its auction an apartment with four bedrooms plus a maid’s room on the 13th floor of St Regis Residences. It is also selling a two-bedroom unit with a utility room on the third level at Gallop Gables.

The Gallop Gables unit, which is leased until August 2013, has a prospective price of $1,400 to $1,500 psf of strata area, working out to $1.6 million to $1.7 million. That translates to a net annual yield of about 2.7 per cent.

The St Regis unit’s indicative pricing is $5 million or $2,358 psf. The property is subject to a two-year tenancy starting this month, with a monthly rental of $11,000.

If all of the above properties are sold at the various auctions next week, it would provide a fillip to auction sales this year, which totalled $47.7 million in the first five months.

The figure for the whole of last year was $83.7 million – an 11-year low.

JLL’s head of auctions Mok Sze Sze says ‘the competitive method of auction bidding is the best way to fetch the optimum price for owners of high-end properties, especially if they are rare and few in supply’.

Property auctions shedding bad image

Source : Sunday Times – 14 Jun 2009

Property market watchers will likely be keeping an eye on the ‘forced-sale’ auction on June 23 of two units at Jasmine Court condominium along Upper Thomson Road.

The two units, owned by one person, will be offered as MCST (management corporation strata title) sales at the Knight Frank auction.

The last time Knight Frank offered such a sale was in April last year. A condo’s management can initiate an MCST sale if a unit owner is in arrears on monthly maintenance and service payments.

Given the current downturn, there has also been talk that the number of mortgagee sales – when owners are unable to refinance their home loans – may increase.

Mr Shaun Poh, DTZ’s senior director for investment advisory services and auction, said, however, that in the short term ‘maybe (in the) next three to six months, I will not expect any increase in the number of mortgagee sales’.

He said banks this time round are quite prepared.

‘That’s why I think there is no panic repossession or foreclosure. The banks are not pulling the plug and are more prepared to talk to borrowers about restructuring their loans,’ he explained.

Colliers International’s figures show that the number of mortgagee sales across all auction houses has not seen a large jump in the first five months of the year.

The highest number of mortgagee-sale auctions was 21 – in February – while the lowest was 15 – last month.

Ms Grace Ng, Colliers’ deputy managing director and auctioneer, said: ‘I think the banks prefer to give the owners time to manage the property on their own.’

She said, however, that the number of mortgagee sales might rise in the third or fourth quarter of the year.

‘Normally, there is a lag time between when the bank repossesses the property and when it puts it on the market.’

Colliers’ data also showed that some $18.5 million worth of properties were sold across all auctions – forced sales or otherwise – last month.

‘Owners are now quite receptive to putting properties up for auction. They have more or less accepted it as an acceptable mode of sale, compared to maybe a decade ago, when mortgagee sales had a bad image,’ said Ms Ng.

Ms Mok Sze Sze, the head of auction and sales at Jones Lang LaSalle, said some good deals were transacted during her firm’s last auction last month.

An example, she said, was a semi-detached house in Namly Garden. It was withdrawn in an auction in January at the highest bid of $2.8 million. Last month, it was sold for $3.7 million.

‘With the recent improved market sentiment, we are seeing more owners’ sales coming on board, with some owners looking at auctions as a way to attain the desired optimum price within a definite timeframe,’ she said.

Perhaps another sign of the improved times is the confidence the owner of a colonial bungalow, in the choice Belmont Road area, has in getting an optimum price.

He will put his property, with a whopping land area of 32,627 sq ft and an indicative price range of $850 to $1,000 per sq ft, up for bidding at Knight Frank’s auction next Tuesday.

Ms Mary Sai, the executive director of Knight Frank, said: ‘Bungalows are hardly put up for auction. It’s basically very rare property.’

The Clift unit fetches 36% less just after a year

Bought for $1.65m by the seller, the 19th floor unit is auctioned for $1.047m

A TWO-BEDROOM apartment on the 19th level of The Clift, at the corner of Telok Ayer and McCallum streets, was sold at a DTZ auction this week for about $1,350 per square foot (psf) – 36 per cent lower than the $2,129 psf the seller is said to have paid for it barely a year ago.

The 99-year-leasehold unit was put up for auction by the mortgagee, understood to be Citibank.

Analysts reckon the $1.047 million the 775-sq-ft unit fetched was probably not enough to cover the loan the seller took for the property when he bought it for $1.65 million in the sub-sale market in July 2008.

At Thursday’s auction at Amara Hotel, there were initially no takers when the auctioneer called for an opening price of $1.08 million. A lower counter offer was made by a bidder and after close to 20 bids from about five parties, an Indonesian investor walked away with the property.

This was not the first time the 19th floor unit featured at an auction. It was offered in March and April this year, with price expectations of $1.1 to $1.2 million, BT understands.

However, the mortgagee bank’s reserve price could not be met then. Market watchers reckon the bank probably cut its reserve price for this week’s auction.

Since March, three other units on the 21st and 22nd levels of The Clift, which is still under construction on the former Natwest Centre site, have changed hands at between $1,111 and $1,218 psf, according to caveats information.

The 43-storey tower – with shop units at street level and apartments above – was designed by the renowned Japanese design firm Super Potato.

Two other mortgagee properties also changed hands at DTZ’s auction. A couple of adjoining first-storey shop units at Grandlink Square in Guillemard Road each fetched $300,000 or $1,546 psf of strata area. They were sold with vacant possession to a Singaporean investor who already owns units in the freehold development, BT understands.

DTZ managed to find a buyer prior to this week’s auction for another mortgagee sale property that was listed for the auction. The 5,188-sq-ft ramp-up factory unit on the second level of Northlink Building in Admiralty Street, Sembawang sold for $520,000. The property is on a site with a remaining lease of about 50 years.

Source : Business Times – 30 May 2009

Jurong Tech’s factory building is up for auction

Source : Business Times - 22 Apr 2009

A TWO-STOREY Tuas factory building owned by Jurong Technologies Industrial Corp has been put up for auction by the company’s judicial manager Deloitte & Touche.

The property, at 18 Tuas West Avenue, is being offered at Colliers International’s auction on April 29.

BT understands the property could be worth more than $3 million. The factory, which is being offered as a sale and leaseback deal, is on a 75,299 sq ft site with a remaining lease of about 17 years.

Colliers will also auction a total of eight apartments and five shops at Upper Serangoon Shopping Centre.

These units are understood to be part of a bigger batch of units in the ageing freehold development that had been offered for sale by tender in 2007 by the building’s developer, Hong Huat Development Co, which is in voluntary liquidation.

The eight apartments on the top floor of the six-storey building will go under the hammer as a single lot at Colliers’ upcoming auction.

Sources say that the opening price will be about $3 million to $3.1 million.

At $3 million, the price reflects about $261 psf of strata area and a net yield of about 3.5 per cent, based on the existing lease on the units, which expires in about a year. All eight apartments are leased to a company.

The shop units, which are being sold individually, are leased to various tenants. The leases expire from around the middle to end of this year.

Opening bids for the shop units are expected to be in the region of $700 psf, which would reflect net yields of about 4 to 5 per cent based on existing tenancies. Besides collecting a rental return, a key attraction for potential buyers of the shops and apartments at Upper Serangoon Shopping Centre would be the prospects of a potential collective sale of the complex.

Colliers is also offering at its auction two mortgagee sale properties. One is a ramp-up flatted factory unit at Tradehub 21 at Boon Lay Way. Tradehub is a site with a remaining lease of about 54 years.

The unit is expected to fetch about $600,000. The other mortgagee sale is of a three-storey freehold detached house, 5B Lim Tua Tow Road (off Upper Serangoon Road).

The property received offers above $2 million at an auction earlier this year, but the mortgagee bank declined to sell at the time.

It could be more flexible now, given the poorer economic outlook, auction market watchers suggest.

A 13th floor apartment at the freehold Orchard Towers - where a collective sale was once planned - will also go under the hammer at next Wednesday’s auction. The 1,970 sq ft unit has an indicative price of about $2.2 million to $2.4 million.

Investors keen on buying strata shop units in the city can consider two basement units at High Street Centre and a couple of third-floor units at Sim Lim Square. These properties have been put up for sale by their respective owners.

Some $18 million worth of properties was transacted at auctions in Singapore in the first quarter of this year, more than three times the $5.4 million notched up in the preceding quarter and also surpassing the $9.5 million in Q1 last year.

Mortgagee sales tipped to rise

Source : Straits Times - 28 Mar 2009

MORTGAGEE sales - when repossessed homes are put on sale by financial institutions - have been few and far between so far but they are tipped to increase in the coming months.

The auction market remains weak but showed signs of life this month, said Colliers International yesterday.

There were 53 repossessed properties - 41 were residential - put up for sale in the first quarter, up 18 per cent from the fourth quarter last year.

Colliers said the rise may be small but it indicates an impending trend of continued growth, which is in tandem with the deteriorating economy.

Deputy managing director and auctioneer Grace Ng said a more significant number of mortgagee sales is expected later this year or next year.

‘This is due to the lag time of approximately six months or more between when a buyer defaults on his loan repayments and when the bank repossesses the property and puts it up for auction sale,’ she said.

Together with properties put up for sale by owners, there were 189 auctions in the first quarter but just 6 per cent were sold, up slightly from the low 5 per cent in the fourth quarter of last year.

Still, the value of deals rose and there were more transactions this month. Eight properties were auctioned off this month for a total of $12.955 million.

These transactions bring the total value done in the first quarter to $17.94million, up a striking 234 per cent from the fourth quarter.

Source : Business Times - 28 Mar 2009

Source : Business Times - 28 Mar 2009

SOME $18 million worth of properties was transacted at auctions in the first quarter of this year, more than three times the $5.4 million notched up in the preceding quarter and also surpassing the $9.5 million in Q1 last year.

The market revved up in March after a muted start in January and February.

Colliers International figures also showed that while the number of repossessed properties put up for auction sales by banks and financial institutions (or mortgagee properties) rose 17.8 per cent quarter on quarter to 53 in Q1 2009, the number of properties put on the auction block by owners themselves slipped 15 per cent over the same period to 136.

The property consultancy group’s deputy managing director and auctioneer Grace Ng is predicting only a slight increase in the number of mortgagee sale properties being put up for auction in the next quarter. However, with an expected increase in retrenchments, which would result in more defaults by borrowers on loan repayments, Ms Ng reckons the pace of mortgagee sale properties going under the hammer could pick up later this year or next year.

‘There’s generally a lag time of about six months or more between when a buyer defaults on his loan repayments and when the bank repossesses the property and puts it up for auction sale,’ Ms Ng observed.

She recalled that during the Asian financial crisis, the number of mortgagee sale properties put up for auction rose markedly only in first-half 1999, although retrenchment numbers had begun to rise as early as Q4 1997.

However, she pointed out that some mitigating factors are also at play this round which may reduce banks’ propensity to race to auction houses when borrowers default on mortgage payments. ‘Financial institutions tend to be more sympathetic and flexible now compared with the Asian crisis days. For example, to help owners ride through this trying period, some financial institutions have provided options, like allowing borrowers in financial difficulty to service only interest payments. Such a move helps reduce or delay the number of properties being repossessed,’ Ms Ng said.

DTZ’s senior director for investment advisory services and auctioneer Shaun Poh said: ‘This time, both banks and borrowers are better prepared than during the Asian crisis, when some people panicked and just handed the keys to their banks. Now, banks are more prepared to talk to the borrowers; that’s partly why we don’t see a lot of mortgagee properties put up for auction. Banks are trying to space out the properties a bit, restructure, renegotiate. And they’re asking owners to try and sell their properties themselves first, whether it’s by auction or private treaty.’

‘It’s also a value preservation strategy. Banks have learnt from the last round that if they pull the plug and take over a property, its value falls. Potential buyers’ perception is that they can strike a bargain for mortgagee sale properties as they’re like fires sales,’ Mr Poh added.

Colliers’ Ms Ng suggests another reason for banks not being in a hurry to foreclose on properties this round may be due to a rule change in 2002 that gave banks first claim to a mortgaged property - ahead of the Central Provident Fund Board - in the event of borrower default. ‘The pressure to foreclose the property by banks/financial institutions is now lower, as their exposure to losses - due to unrecoverable outstanding loan amount - is reduced,’ she added.

Colliers’ analysis showed that 77 per cent or 41 of the 53 mortgagee properties that went on the auction block in Q1 were residential properties; 27 were apartments/condos while the remaining 14 were landed homes. These landed properties were mostly in District 19, which includes Serangoon Gardens, Hougang and Punggol.

‘We can expect to see more apartments/condos surfacing at auctions as there are about 14,600 non-landed properties due for completion in the next two years,’ Ms Ng said.

Just four properties were sold at auction for nearly $5 million in January and February this year but things started to hot up a bit in March, with eight properties transacted for $13 million. ‘The price gap between sellers’ asking price and buyers’ offer price appears to have narrowed in March. The rallies in the stockmarket, together with the positive take-up rate at developers’ launches in the past two months, seem to have spilled into the secondary market - resulting in buyers’ commitment to purchase the units.

‘Interestingly, owner occupiers constitute the bulk of buyers making commitments to purchase now,’ Ms Ng said.

Number of mortgagee properties on auction block up in Q1

Source : Business Times - 27 Mar 2009

The number of repossessed properties put up for auction sale by banks and financial institutions in Singapore has risen by 18 per cent - from 45 in fourth quarter 2008 to 53 in Q1 2009, according to Colliers International.

‘This indicates an impending trend of continued growth in the number of properties put up for mortgagee sale, which is in tandem with the deteriorating economy and rising level of retrenchments,’ the property consultancy said in a release issued on Friday evening.

Colliers deputy managing director and auctioneer Grace Ng said: ‘We can expect to see a more significant number for repossessed properties in the later part of the year or in 2010. This is due to the general lag time of approximately six months or more - between when a buyer defaults on his loan repayments and when the bank repossesses the property and puts it up for auction sale.’

Number of repossessed properties rises 18% in Q1

Source : Channel NewsAsia - 27 Mar 2009

The number of repossessed properties put up for sale by banks and financial institutions in Singapore rose by 18 per cent in the first three months of 2009 compared to the previous quarter.

A total of 53 properties were repossessed in the first quarter of 2009, up from 45 in the previous quarter.

Real estate consultancy firm Colliers International said its findings indicate a continued trend in mortgagee sale as a result of the worsening economy and rising level of retrenchments.

It expects more properties to be repossessed in the later part of the year or in 2010.

Of the 53 properties put up for mortgagee sale in the first three months of this year, 41 were residential properties. And among those, 27 were apartments, with the remaining 14 being landed homes.

Colliers said 12 properties were sold at auctions in the first quarter, with a total sale value of over S$17 million, over two times more than what was recorded in the fourth quarter of 2008. They included seven mortgagee sales and five owner sale transactions.

Colliers said auctions would remain popular with owners, going forward. It also expects a greater number of high-end and luxury properties to be placed for sale via auctions.