SIX developers squared off for a residential site in Sembawang with the top bid coming in at $191.8 million, well ahead of market expectations.

The site at the corner of Sembawang Road and Jalan Sendudok is near Sembawang Shopping Centre and Sembawang MRT station – key attractions for developers and home buyers.

Hao Yuan Investments, controlled by Singaporean permanent resident Du Zhen Zeng, lodged the top bid, which equates to $460 per sq ft per plot ratio. Little is known about Mr Du, who lives in a bungalow at Sentosa Cove.

Analysts had predicted the top bid would fall somewhere between $154 million and $165 million.

A joint venture between Fragrance Group and Aspial Corporation was second on $172.6 million. Hong Leong Group, a team of Frasers Centrepoint and Far East Organization, Hoi Hup Realty in league with Sunway Developments and Allgreen Properties were also in the running.

The 99-year leasehold site is on 297,789 sq ft and can be built up to a maximum gross floor area of 416,908 sq ft, yielding about 390 units.

Analysts estimate the breakeven cost could hover around $800 psf with average selling prices at $900 psf.

CBRE research director Li Hiaw Ho said: ‘The confidence in this site could be attributed to the good response to Canberra Residences and more recently, Eight Courtyards at Yishun Avenue 2.’

Canberra Residences, which is closer to Sembawang MRT station than the Jalan Sududok site, has sold about 85 per cent of its 320 units at an average of $830 psf. The nearby Eight Courtyards has moved 75 per cent of its 654 units since its April launch, with prices averaging $800 psf.

Private home sales were robust last month, rising 29 per cent from March to a five-month high of 1,788 units.

Credo Real Estate’s head of research and consultancy, Mr Ong Teck Hui, said the figures point towards healthy demand, especially in the suburbs. This segment has become more active with recent launches like Hedges Park Condominium, Foresque Residences and Terrasse.

‘The tender response also shows the market is not too concerned about the impending upward revision in the HDB income ceiling,’ he said. ‘(Developers) probably feel that any impact on the private market… would be manageable.’

Source: Straits Times, 27th May 2011

The top bid by MCL Land for the site at the junction of Jalan Loyang Besar and Pasir Ris Drive 4 works out to $402 per sq ft per plot ratio (psf ppr), 5 per cent more than Allgreen Properties’ second-placed bid of $383 psf ppr. A joint bid by Frasers Centrepoint, Far East Organization and China State Construction International came in last, at $360 psf ppr.

The interest level for the 99-year leasehold site that can yield about 580 homes was rather subdued, experts say. However, they add that it does not signify any major change in market sentiments.

The site is at an average location without any strong pull factors, said Mr Ong Teck Hui, Credo Real Estate’s head of research and consultancy.

Another factor that could also have affected interest is the nearby Seastrand project, a 462-unit condominium that is ready for launch. As Seastrand has the first-mover advantage, it could soak up the demand for homes in the area.

The Seastrand site attracted four bidders when its tender closed in September last year. It sold for $335 psf ppr.

Mr Li Hiaw Ho, executive director of CB Richard Ellis Research, agreed that the number of bids probably reflects developers’ awareness of potential competition from other projects in the vicinity.

A government review of the income ceiling of public housing for first-time buyers may also have an impact on the demand for mass-market private homes, he added.

Mr Li expects a break-even cost of around $750 psf, with units in the new project able to fetch above $800 psf on average. ‘Demand is likely to come from the potential upgraders currently living in Pasir Ris and Tampines new towns and those working at Changi Airport, Pasir Ris Wafer Fab Park and Tampines North Wafer Fab Park,’ he added.

Units in nearby NV Residences at Pasir Ris Drive 1 and Oasis@Elias were recently sold at between $800 psf and $890 psf and between $680 psf and $830 psf respectively, Mr Li noted.

Source: Straits Times, 11th May 2011

It said escalating real estate prices, supported by the improved economy, have reduced the likelihood of non-performing loans and foreclosure sales.

Only 89 properties involving foreclosure sales were put up for auction last year, down from 159 in 2009. This covers residential, commercial and industrial properties.

The proportion of mortgagee sales out of the entire auction market fell to 14 per cent from 23 per cent in the same period. The rest were owners conducting the sale, as opposed to financial institutions foreclosing on debts.

Knight Frank said the number of mortgagee sales has dropped drastically since 2004 and failed to rise even during the global financial crisis, when such sales traditionally increase as the number of non- performing loans spike. This trend could be explained by the quick recovery of the market and the changing approach of banks, Knight Frank said.

Asking prices for mortgagee properties are typically closer to the valuation price and the expectations of sellers are more realistic. However, expectations are often higher for owner sales.

Mr Png Poh Soon, head of research and consultancy at Knight Frank, said some banks seeking to recover loans have increasingly allowed owners to put their properties up for auction as an owner sale in order to achieve better prices.

Last year, the residential sector emerged as the star player in the auction market, making up 60 per cent of all properties put up for auction with a total sale value of $107.3 million. A large portion was driven by the sale of four good-class bungalows, totalling $57.4 million. Prime non-landed homes and landed homes comprised most of the rest, and auctions of mass market homes were the least common.

Mr Png said auctions have become an avenue by which sellers and buyers can purchase already completed properties or larger-sized older properties.

‘Some players in the market are also beginning to view auctions as a place to acquire prime properties or a mode of sale that can achieve higher prices through competitive bidding,’ he added.

The office sector, however, saw a dip in properties put up for auction compared with 2009 figures in the light of improved rental yields, even as office capital values see gains.

The industrial sector, in contrast, saw a doubling of the number of properties put up for auction. There was, however, a 50 per cent drop in the total value of industrial properties sold owing to smaller- sized units and lower total values of such properties sold last year, Knight Frank said.

Mr Png said the residential sector of the auctions market has been driven mainly by landed and prime residential properties, and that this will continue this year due to high liquidity, a buoyant economy and foreign interest.

‘The large supply of land from the government land sales programme for the first half of (this year) is unlikely to impact the performance of auctions significantly as the mass market does not constitute a significant proportion of auctions,’ he said. The commercial sector is also expected to pick up as office rents recover and buyers seek out good rental income.

Mortgagee sales may be declining but some high- profile properties continue to be sold this way. Last Saturday saw an advertisement in the classified section of The Straits Times for a mortgagee bank sale of a 3,164 sq ft seafront penthouse at The Azure at Sentosa Cove.

Source: Straits Times, 1 Jan 2011

In all, the value of properties sold at auctions rose 33 per cent to $223.9 million this year, buoyed by rising property prices and more big ticket sales.

The residential sector accounted for more than half, or 51.3 per cent of the total value of properties sold at auctions this year, according Colliers International. Most sellers were owners themselves as the value of mortgagee sales fell.

The $114.8 million worth of homes that changed hands at auctions in 2010 reflect an increase of 30 per cent from last year. Just 12 landed homes accounted for $79 million, or 70 per cent, of this number.

These included four bungalows in Good Class Bungalow (GCB) Areas – 4 Margoliouth Road, 6 Coronation Road West, 53 Sixth Avenue and 5 Chestnut Close – sold for a total $57.4 million. Last year, 18 landed homes were sold for $37.7 million, none of them in a GCB area, said Colliers.

In the non-landed residential segment, 24 properties were transacted at auctions for $35.88 million, of which nine (totalling $21.7 million) were in prime districts.

The most expensive non-landed residential unit sold at auction this year was a unit at D’Grove Villas in the Orange Grove area which fetched $5.42 million, followed by a unit in Makeway View in the Kampong Java Road location ($3.88 million) and a unit in Oceanfront, Sentosa Cove ($3.15 million).

On the whole, while the value of properties sold at auctions rose 33 per cent this year, the number of properties transacted fell nearly 40 per cent to 71 this year. This year’s $223.9 million auction sales was still 45 per cent shy of the decade’s high of $407.4 million in 2007.

Colliers said that while the value of properties sold at auction arising from owner sales jumped from $90.8 million last year to $178.6 million in 2010, the value of mortgagee sale properties sold at auction declined from $77.6 million to $45.3 million.

The number of properties put up for auction by mortagees declined from 195 in 2009 to 103 this year, the lowest level in 13 years. Owners put 688 properties on the auction block this year, also down from 732 last year.

Knight Frank executive director Mary Sai said that while auctions were becoming more popular among owners looking to sell, mortgagee sales had lost share as the robust economy meant fewer non-performing loans.

‘Also, the appreciation in real estate values reduces the risk of borrowers defaulting on loans,’ she said.

Colliers deputy managing director Grace Ng said that the profile of buyers has changed from a crowd seeking distressed assets to one that regards auctions as an avenue to acquire prime properties.

‘Increasingly, we see permanent residents and foreign bidders from neighbouring countries – including Malaysia, Indonesia, Hong Kong, India and even China – attending auctions,’ she added.

Ms Sai reckons residential properties will continue to hog the limelight at auctions next year as ‘their stock is more readily available for auction than non-residential properties’.

In fact, non-residential properties on the auction block were generally muted this year. Owners of shop units, shophouses, office and industrial units enjoyed attractive net rental yields of about 4-5 per cent on them. ‘Hence, they’re less forthcoming in parting with these cash-cows,’ said Ms Sai.

Ms Ng highlighted that there were 11 high-value properties (each over $5 million) sold at auction this year, against just two last year. This year’s high-value deals included a shophouse hotel at Desker Road which fetched $10.3 million, five strata office units at The Central ($9.98 million) and a petrol station at Jalan Ahmad Ibrahim ($30.2 million).

The value of office units sold at auctions rose from just $3 million last year to $18.2 million this year as optimism returned to the sector amid rapid recovery in office demand and rents.

Auction sales of retail properties fell from $43.4 million in 2009 to $27.1 million this year, while the figure for industrial properties halved to $10.3 million.

Ms Ng reckons the value of auction sales next year is likely to exceed $200 million. Mortgagee sales are expected to continue their downward trend.

Source: Business Times, 17 Dec 2010

A FEW relatively big-ticket items were sold at property auctions last week. These include a freehold bungalow in the Chestnut Avenue Good Class Bungalow Area which went for $5.24 million, and a couple of adjoining office units at The Central which fetched $4.61 million.

Bidding for the bungalow at 5 Chestnut Close started at $4.5 million and the property received 16 bids in total. It was sold to a Singaporean buyer. The sale price works out to about $874 per square foot based on a land area of 5,998 square feet. The new owner of the part one/part two storey bungalow is expected to tear down the existing property and redevelop it.

It was sold at a Colliers International auction on Oct 20 by the trustee of an estate. The same party had earlier divested two other freehold bungalows at a Colliers auction last month. No 4 Margoliouth Road (off Stevens Road) fetched $13.6 million or $1,304 psf based on its land area of 10,433 sq ft, while 53 Sixth Avenue was sold for $12 million or $1,145 psf based on a land area of 10,476 sq ft.

A DTZ auction on Oct 19 saw two adjoining office units on the 19th floor of The Central, above Clarke Quay MRT Station, being sold for $4.61 million or $1,815 psf based on their total strata area of about 2,540 sq ft.

The Central is built on a site with 99-year leasehold tenure starting Jan 2, 2001.

The buyer is a Singaporean company that is expected to occupy the premises. The office units were sold by a liquidator. The company being liquidated is understood to have been the mortgagor of five other office units on the same floor of The Central that were the subject of a mortgagee sale at a DTZ auction in July. That transaction was for $9.98 million, translating to a higher unit price of $1,991 psf. Those five units enjoy a superior view, facing Marina Bay Sands, whereas the latest two units have views of Swissotel Merchant Court and a partial view of the Singapore River.

The five units are understood to have been bought by a Singaporean investor. Bidding for both sets of properties at their respective auctions was very competitive, reflecting the strong interest in the strata office market on the back of rising office rents, DTZ said.

The Central, developed by Far East Organization, comprises a retail podium, two small office-home office towers, a 25-storey office tower, a sky garden and recreational facilities. The project has clinched the international Fiabci Prix d’Excellence Award 2010 (office category) as well as Singapore’s Building and Construction Authority’s Construction Excellence Award 2010.

Source: Business Times, 26 Oct 2010

THE Hungry Ghost Festival had an even more deadening effect on the property market than usual, with only three deals worth $5.23 million done by the nation’s auction houses.

Sales during this year’s festival period, which ended on Tuesday, were the lowest since 1998 when only $1.65 million worth of deals was done, according to data from Colliers International.

The comparison with last year’s figures is even more striking: Then, 14 deals worth $25.92 million were struck, with nearly $19 million stemming from the residential sector.

This year, there were no residential deals, yet these traditionally form the bulk of auction sales.

Superstitious people tend to refrain from making big commitments such as marrying, buying property or moving house during the Hungry Ghost Festival, which falls on the seventh month of the lunar calendar.

But the lack of residential sales this year – despite 44 homes going up for auction – may have more to do with real estate issues.

Colliers’ deputy managing director (agency and business services), Ms Grace Ng, said the lack of buying interest in residential properties could be ‘attributed to sellers’ increased expectations and higher asking prices’.

Knight Frank’s head of residential auctions, Ms Sharon Lee, added: ‘It’s because the market has gone up a lot and buyers are more selective.

‘Mass-market properties with a lower price quantum of below $1.5 million will generally still be attractive.’

Colliers said the three deals completed involved two shophouses in Dunlop Street in Little India sold as one property for $4.04 million, an HDB shop unit in Bishan that went for $910,000, and a strata factory unit in Toh Guan Centre worth $280,000.

The total number of properties put up for auction during the Hungry Ghost Festival remained high at 51 but there were only seven mortgagee sales, it said. This was the lowest figure registered during the Hungry Ghost Festival in 13 years and the lowest monthly figure this year.

Ms Ng said there has been a continued decline in the number of mortgagee sales and this is likely due to the buoyant economy, high employment figures, low interest rates and a robust property market.

The total sale value achieved at auctions so far this year is around $114.65 million. Colliers said full-year sales should be close to last year’s $168.4 million.

Ms Ng expects the recent cooling measures to hit the auction market in the short term. ‘Buyers will now be more careful in doing their sums based on the 70 per cent loan-to-value in financing, while sellers will be more realistic in setting their asking price.’

Source: Business Times, 9 Sep 2010

Only three properties – none of them residential – sold at auction, fetching a total of $5.23 million.

In contrast, 14 transactions worth $25.92 million took place during the Ghost Month last year. And most of them – accounting for $18.98 million – were residential.

Some 44 residential properties were put up for sale during this year’s Ghost Month. Colliers International’s deputy managing director (Agency and Business Services) Grace Ng reckons that their failure to sell has less to do with cultural taboos and more to do with buyer savvy. ‘It could be attributed to sellers’ increased expectations and higher asking prices, leading to a longer period of marketing and negotiations as buyer resistance set in over time,’ she said.

During this year’s Ghost Month from Aug 10 to Sept 7, a total of 51 properties were put up for auction.

Only seven of them were mortgagee sales – the lowest number in 13 years and the lowest monthly tally this year, which Colliers said reflects a buoyant economy, high employment, low interest rates and a robust property market.

Auction sales so far this year total $114.65 million. And Colliers believes that the full-year figure will likely be close to last year’s $168.4 million, despite the government recently announcing cooling measures that will have ‘an impact on the property auction market in the short term’.

‘Buyers will now be more careful when doing their sums based on the reduced 70 per cent loan to valuation in financing, while sellers will be more realistic when setting their asking price,’ Ms Ng said.

But, the new measures will have little effect on people eyeing landed properties in Districts 9, 10 and 11 as they are mostly owner-occupiers buying to stay for the medium to long term. Said Ms Ng: ‘These buyers have the tendency to take a lower percentage of financing. Most of them would finance their purchase using cash from the sale of their first property.’

Source: Business Times, 9 Sep 2010

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.

The writer is deputy managing director (Agency and Business Services) and Auctioneer at Colliers International.

Source: Today, 6 Aug 2010

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

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 News Asia, 30 Jun 2010