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.

Source: Sunday Times, 27 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.

Source: Business Times, 18 Dec 2009

Separate Colliers auction sees 2 shop units, 2 houses and 1 apartment sold

(SINGAPORE) The owners of eight freehold strata-titled commercial units and vacant site at Thomson Village, off Upper Thomson Road, have joined forces to sell their properties through a tender. The properties have a combined site area of 13,387 sq ft and an asking price of $24 million.

Under Master Plan 2008, the site is zoned for commercial use. ‘The plot ratio is not indicated but the site is under a streetblock plan, which means the potential developer will have to follow an envelope control guideline for the area set by Urban Redevelopment Authority. The properties could be redeveloped into a low-rise specialty retail mall,’ said Galven Tan, assistant manager (investment properties) at CB Richard Ellis, which is marketing the site.

‘Depending on the design of a new development, a 2.8 plot ratio could be achieved,’ according to Mr Tan. Plot ratio is the ratio of maximum gross floor area to land area. Assuming this plot ratio, an estimated development charge (DC) of $5 million would be payable to the state. The $24 million price works out to $774 psf per plot ratio inclusive of DC.

The owners of the strata commercial units and the vacant site have signed a collective sale agreement, which means the sale will not be subject to an application to the Strata Titles Board. The tender closes on Nov 25.

There is adjoining state land of about 6,400 sq ft that could potentially be purchased by the successful bidder, CBRE says.

Separately, at an auction conducted by Colliers International yesterday, five properties were sold – an apartment at The Horizon at Holt Road; two freehold landed houses at Jalan Taman and Lowland Road, both off Upper Serangoon Road; and a shop unit each at Sim Lim Square and Golden Landmark.

The ground floor unit at Sim Lim Square, which involved a liquidator sale, was sold to a private investor for $3.75 million, reflecting $6,970 psf based on the unit’s 538 sq ft strata area. The unit faces the main concourse. Last week, Second Chance Properties picked up 22 shop units at Sim Lim Square for $35 million or an average price of $3,644 psf based on their total area of 9,604 sq ft.

Over at Golden Landmark, near Bugis MRT Station, a 355 sq ft corner shop on the third floor with double frontage changed hands at $365,000 or $1,028 psf.

The third-floor freehold apartment at The Horizon was sold for $1.8 million or $1,154 psf. The two-storey intermediate terrace house at Jalan Taman was sold for $1.25 million or $630 psf of land area.

At 74 Lowland Road, which is next to a temple, the three-storey semi-detached house with six bedrooms was sold for $1.72 million or $636 psf of land area. The buyer is understood to be a former Chinese national who is now a Singapore citizen.

Source: Business Times, 29 Oct 2009

Property auctions are another avenue house-hunters can explore

An auction is another marketplace home buyers can check out if they want to widen their property search.

Auctioneer Mary Sai from Knight Frank said the auction method is fast, neat and transparent.

While there may not be as many mortgagee sales – when a bank sells a property it has repossessed because the borrower cannot pay his mortgage – as expected earlier, there are more owners willing to sell via auction.

If you are interested in taking this route you can start by contacting the auction houses to get an idea of the properties on offer.

The main auction houses in Singapore – Colliers International, DTZ, Jones Lang LaSalle and Knight Frank – post their auction dates, venues and available properties online. They usually hold their auctions at Amara Hotel.

Apart from the big boys, there is also CKS, a smaller but long-time player. Recently, new entrants such as Credo Real Estate have also joined the market.

Before the auction

If a property on the list catches your eye, you can arrange to view it before the auction.

Viewing the property allows potential buyers to assess the condition in which it will be sold, auctioneers say.

You should also check the conditions of sale of the property and watch out for last-minute changes.

The auction houses will value the properties and provide a price guide for buyers.

‘If it’s a mortgagee sale, banks usually provide the reserve price only at the last minute, so we will first get our valuers to give a range of prices as a guide,’ said Mr Shaun Poh, DTZ senior director for investment advisory services and auction.

Although an auction sale is conducted publicly when the property goes under the hammer, auctioneers say buyers are free to make a bid before the auction as some vendors may be keen to sell.

And before heading to the auction hall, it is important that potential buyers have a price range in mind so they know how far their bids can go, said Ms Mok Sze Sze, Jones Lang LaSalle’s head of auction & sales.

Those who require financing should make sure they consult their bankers ahead of the event, said Ms Sai.

And do not forget to take your cheque book. Should you succeed in bidding for a property, you will have to pay a 10 per cent deposit. Those buying commercial properties also have to pay the Goods and Services Tax on the spot.

During the auction

Upon entering the venue, find a seat in a conspicuous position so the auctioneer can see you and acknowledge your bids, advised Ms Sai.

Bidders should be alert and keep track of their competitors as some properties sell quickly.

They should raise their hands to bid only if they are clear on the price increment the auctioneer has asked for. Increments can range from $5,000 to $20,000 depending on the price of the property.

But if you are keen on buying a property and do not want to pay too much, there is no harm trying for a smaller increment of $1,000, said Ms Mok.

The auctioneer may invite bids from the floor, and that is when bidders can call out a price increment.

Bidders can even make a counter offer, particularly at the start, auctioneers say.

On the other hand, if they are very keen on a property, they can consider a ‘jump bid’ – a bid higher than what the auctioneer is calling for – to outbid competitors.

Assuming the price has reached $800,000 and the auctioneer is calling for $820,000, the buyer can choose to make a jump bid by offering $850,000.

By doing so, he has taken away his competitor’s likely bid of say, $840,000, said Ms Mok. ‘A jump bid indicates a strong interest in securing the property and is a good way to cut off competition.’

Finally, when bidding, be decisive, as you are not allowed to retract your bids.

After the auction

‘Bidding is buying,’ said Ms Sai. ‘When the auctioneer says ‘Sold’, the property is yours. You then sign the contract and pay the deposit immediately.’

There is no cooling-off period. You pay the remaining 90 per cent upon completion of the sale, usually within eight to 12 weeks.

If the property you are bidding for fails to reach the reserve price, leave your contact number as the vendor may decide to sell it later, says Mr Poh.

Source: Sunday Times, 18 Oct 2009

Ignoring taboo associated with Hungry Ghost Festival, buyers push up sale value to 3-year high

This year’s Hungry Ghost Festival has ended well for some sellers as more buyers ignored the taboo associated with making a property purchase during the Hungry Ghost Festival.

A report by consultancy Colliers International showed that 14 properties worth $25.92 million were auctioned off during the festival which ran from Aug20 to last Friday. This is the highest sale value recorded in three years, it said.

The figure beats the $9.56 million worth of sales during the festival in 2007, when sellers were still asking for the moon while buyers were starting to be wary of high prices because of the US sub-prime crisis.

In 2006, when there was a double Hungry Ghost month due to a quirk in the lunar calendar, $133.9 million worth of properties were sold at auctions. The market was then running up and a Sentosa Cove auction held during the period – which fetched $86.34 million for a dozen bungalow plots – helped to push sales up.

During the Hungry Ghost Festival, which falls on the seventh month in the lunar calendar, superstitious buyers refrain from making big commitments. These include getting married, buying a property or moving house.

Still, practicality sometimes overrides superstition as buyers find it hard to resist a good deal, experts said.

‘It was only during the past two to three years that it became obvious that people are becoming less superstitious,’ said Knight Frank auctioneer Mary Sai. ‘This year, we have seen people coming back to the auction market since April as they felt that the new launches were beyond their reach. And the momentum has kept up through the seventh month.’

During this year’s Hungry Ghost Festival, 85 properties were put up for auction sale, of which 66 were by property owners. The remaining 19 properties were mortgagee sales – the lowest figure in 12 years, said Colliers.

The third quarter saw 57 repossessed properties put up for sale by banks, compared to 76 in the first half, but the rise may not continue in the fourth quarter which is traditionally quieter, said Ms Sai.

Colliers’ deputy managing director (agency and business services) Grace Ng said owners in default are finding it easier to sell in the open market. Also, banks and financial institutions are managing their non-performing loans by giving owners the chance to dispose of their properties within a specified time.

Ms Ng said the strong response this year showed sellers were more influenced by market conditions than cultural taboos, although some still prefer to hold back.

Businesswoman Irene Teo is one of those. She will be putting three properties up for auction later this week. ‘I am not superstitious but the pool of buyers out there may be,’ she said.

She hopes to get at least $3.75 million for her 2,540 sq ft unit in Leonie Gardens near Orchard Road. ‘If I sell by auction, I feel that I can attract more people, especially investors, at one time,’ she said.

Ms Ng said sellers are the ones who are keener to wait for the Hungry Ghost month to end. ‘The buyers usually don’t mind,’ she said.

—————————————-
KEY FIGURES

14 properties worth $25.92m were auctioned off during the festival which ran from Aug 20 to last Friday;

85 properties were put up for auction sale; 66 of them were by property owners; 19 properties were mortgagee sales.

Source: Sunday Times, 20 Sep 2009

THE Singapore Land Authority (SLA) is set to auction a site for heavy vehicle parking at 42 Defu Lane 7.

The 21,058 sq m plot will be offered on a three-year lease with an option to renew for a further two years.

The specified minimum deposit is $39,000. Two site visits will be conducted at 4pm on Sept 8 and 9.

Only heavy vehicles with a maximum laden weight exceeding 5 tonnes, such as buses and trailers, can park at the site.

SLA has appointed Colliers International (Singapore) the auctioneer. The public auction will be held at 2.30pm on Sept 23 at Amara Hotel.

Source: Business Times, 2 Sep 2009

As prices of new homes rise, investors are turning to auctions and the resale marketINVESTORS who are put off by the exuberant prices of late for newer properties are turning to auctions to pick up older properties that have not quite appreciated in the same way.

Two apartments at Four Seasons Park near Orchard Road and an apartment at The Waterside in Tanjong Rhu have changed hands at auctions this week.

Colliers International sold the pair of neighbouring three-bedroom apartments at Four Seasons Park, on the fifth floor of the development’s Autumn block, for more than $2,100 per square foot each.

The apartments, each of 2,260 square feet, were put up for sale by a mortgagee bank on vacant possession basis. Unit #05-01 was sold for $4.8 million or $2,124 psf, while the next door #05-02 fetched $4.84 million ($2,142 psf).

The two units were bought separately by Singaporeans.

BT understands that the same mortgagor had owned the two properties. According to caveat records, the units were purchased at $3.25 million each, one in August 2001 and the other in January 2002.

In June this year, a 3,821 sq ft unit on the 20th level of Four Seasons Park changed hands at $2,146 psf. In April, a 19th floor unit sold for $1,637 psf.

Jones Lang LaSalle at its auction yesterday sold a 14th floor unit at The Waterside condo in Tanjong Rhu for $2.55 million or $1,190 psf. It was also a mortgagee sale.

At another auction this week, conducted by DTZ, a three-bedroom apartment on the 22nd floor of Spottiswoode Park was sold for $630,000 or $496 psf. The development is on a site with a remaining lease of 66 years.

‘Buyers are turning to the resale market, whether through private treaty or auction, to pick up properties that are more than 10 years old as their prices have not escalated as much as prices for newer properties,’ says Knight Frank executive director and auctioneer Mary Sai.

Landed homes have also been in good demand at recent auctions. A strata bungalow, 261 Northshore, in Ponggol Seventeenth Avenue sold for $1.87 million at Knight Frank’s auction on Aug 20. The freehold property’s built-up area is about 5,500-5,600 sq ft. The property was sold by its owner, who is also in the midst of negotiating the sale of the next door bungalow at 263 Northshore after it was withdrawn at the same auction.

Colliers deputy managing director and auctioneer Grace Ng said: ‘The frustration being faced by those shopping for landed homes is that when they make an offer, sellers often increase their asking prices, which thus becomes a moving target. In contrast, at an auction, once the seller’s target price has been reached, there is certainty the property will be sold to the highest bidder.’

At its auction on Wednesday this week, Colliers sold a freehold semi-detached house at 102 Sunbird Circle, off Upper Changi Road, in District 16 for $1.98 million or $565 psf based on the land area of 3,506 sq ft. The two-storey house has five bedrooms.

At its auction yesterday, JLL sold a third level shop at Sim Lim Square for $2.95 million or $4,282 psf. The 689 sq ft shop (comprising two units – front and back) is near a lift. Sim Lim Square has about 73 years remaining lease.

Also transacted at the same auction were 16 and 18 Tanjong Pagar Road, at $2.48 million. The ground floors of the two-storey conservation shophouses are currently leased to a pub/karaoke lounge while offices occupy the upper level.

The shophouses, which have a single title, have a land area of 1,976 sq ft and have about 90 years remaining lease.

Source: Business Times, 29 Aug 2009

The firm says it could be due to banks being less anxious to foreclose

BARGAIN hunters waiting for more distressed properties to show up at auctions could be in for a disappointment.

Real estate consultancy firm DTZ believes that the number of mortgagee sale properties will not rise in the second half of the year as the open market has improved.

‘The recent buying interest in the property market and stabilisation of prices across all sectors in Q2 2009 would have enabled cash-strapped owners to dispose of their properties,’ says DTZ in a report released yesterday.

Fresh data from the Urban Redevelopment Authority (URA) illustrates the renewed enthusiasm
among home buyers.

Developers sold 1,825 new units in June, breaking the previous record of 1,723 units set in August 2007.

In fact, after a spike in February, the number of mortgagee sale properties put up for auction has tapered off.

‘The less than expected mortgagee sales in the current economic downturn could be due to banks being less anxious to foreclose now,’ DTZ says.

It explains that the government has been urging banks to give debtors more leeway to service their loans.

Banks are also not rushing to foreclose on properties if they have to accept lower prices and risk ending up with too much stock.

DTZ’s views on the number of mortgagee sale properties to surface differ slightly from another industry watcher’s.

Colliers International deputy managing director and auctioneer Grace Ng expects to see a ‘marginal increase’ in such cases at auctions.

Colliers’ report late last month notes that it can take six months or longer for a bank to repossess properties and put them up for auction, after owners default on their loans.

Banks may also give owners some time to sell the properties on their own.

As a result, more mortgagee sales may only enter the market in the second half of the year.
DTZ and Colliers share similar views on most other trends in the auction market.

For instance, the value of properties sold through auction has certainly picked up tremendously since last year.

According to DTZ, major auction houses in Singapore posted $72.5 million in transaction value in the first half of this year.

This already surpasses the transaction value in the whole of 2008, which was $65.5 million. In particular, buying interest soared in March and remained buoyant up till June.

June was the most active month, accounting for 34 per cent of the total number of properties sold in the first half of the year.

The proportion of properties successfully sold through auctions also rose between March and June.
The success rate in that period was 26 per cent, compared with just 5 per cent between January and February.

Source: Business Times, 16 July 2009

Figures show uplift in property market over the past few months

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.

Source: Straits Times, 27 June 2009

Figures show uplift in property market over the past few months

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.

Source: Straits Times, 27 June 2009