Colliers International, Singapore

Data compiled by international property consultant, Colliers International, concluded that the Singapore property auction market witnessed a healthy 1H 2010, during which S$86.99 million worth of sales transactions were chalked up.  This is 20.2 per cent higher than the S$72.4 million seen in the first half of 2009. 

A total of 440 properties were put up for auction sale in the first six months of 2010.  Of these, a whopping 378 properties were from property owners, while only 62 were mortgagee sale. 

Ms Grace Ng, Deputy Managing Director (Agency and Business Services) and Auctioneer, says, “In fact, the decline in the number of properties put up for mortgagee sale hastened in 1H 2010 – from a 10.7 per cent decline seen in 2H 2009 to a significant fall of 32.6 per cent in 1H 2010. 

The sharp fall in the number of properties put up for mortgagee sale in 1H 2010 is a reflection of the vastly-improved financial position of mortgagors – on the back of Singapore’s buoyant economy and its accompanying fall in unemployment rate, as well as the continued low interest rate environment.

A total of 46 properties were sold at auction in 1H 2010, generating a total sale value of S$86.99 million.  Of this, S$61.21 million (70.4 per cent) was contributed by owner sales, while S$25.79 million (29.6 per cent) was by mortgagee sale.

April was the star performer month in 1H 2010, during which 12 properties changed hands at a total value of S$24.44 million. The lull period was in May, in which only two properties were sold for S$6.89 million.  The quiet period could be due to concerns over the European debts, as well as the tension between North and South Korea that sent jitters through the stock market. 

Popular Property Types Sold at Auctions in 1H 2010

1. Landed Residential Properties
A total of seven landed residential properties worth a total of S$20.08 million were transacted at auctions in the first six months of the year.   This is 23.1 per cent of the S$86.99 million sale value done during the period. 

Ms Ng explains, “Landed residential properties have traditionally been popular due to the grant of land title as against strata title accorded for ownership of apartments and condominiums.  Their limited supply in land-scarce Singapore has furthered honed their prestige attractiveness among home buyers in Singapore.”

Four out of the seven landed properties sold were located in the Bukit Timah vicinity – two semi-detached houses at Hillcrest Road were sold at S$3.32 million and S$3.53 million, and another two semi-detached houses at Watten Estate were transacted at S$3.4 million and S$3.91 million.    

Ms Ng continues, “The upcoming MRT Circle Line at Bukit Timah has further enhanced the appeal of residential properties in the Bukit Timah locality, which has always been a prime location for families with school-going children due to its proximity to popular schools and the city.”

2. Retail Properties
The next star performer in 1H 2010 is retail properties, with nine of such properties worth S$20.07 million being knocked down at auctions.  This accounted for some 23.1 per cent of the total sale value. 

Two strata-titled retail properties at ICB Enterprise House in Middle Road and Yio Chu Kang were sold for S$5.5 million and S$2.88 million, respectively.  Two adjoining units of shophouses in North Bridge Road were sold for a total price of S$3.44 million, while two other shophouses at Tras Street and Beach Road were sold for S$2.96 million and S$2.18 million respectively.  Meanwhile, four HDB shophouses at Ang Mo Kio, Bukit Merah, Bedok and Crawford Lane were sold at S$1.23 million, S$970,000, S$725,000 and S$180,000, respectively. 

Ms Ng comments, “The popularity of retail properties could be attributed to the attractive rental yields that are estimated at between five and six per cent.  This entices investors to park their funds in such properties to seek higher returns, compared to the paltry interest rate offered by most financial institutions. 

Additionally, with inflation forecast to rise to between 2.5 and 3.5 per cent this year, and high liquidity in the market, savvy investors tend to seek out properties to park their funds – an approach perceived as a good hedge against inflation in the long run.  The low interest rate environment also serves as another possible push factor for buyers to take on mortgages at attractive rates.”  

3. High-end Apartments
Five high-end apartments worth a total of S$13.38 million were transacted via auction in 1H 2010, making up 15.4 per cent of the total sale value.  The prominent sale of high-end apartments at auctions could be prompted by the return of foreign buying interest amid the opening of the two integrated resorts. 

The most expensive high-end apartment transacted was a unit at D’Grove Villas (Orange Grove Road) which was knocked down at S$5.42 million.  The remaining four properties at Leedon 2 (Leedon Road), Claymore Plaza Apartment (Claymore Hill), The Beaumont (Devonshire Road) and Oceanfront (Sentosa Cove) were sold at prices ranging from S$1.38 million to S$3.15 million. 

4. Residential Development Land 
Two plots of land were sold for a total value of S$11.3 million were snapped up, reflecting developers’ hunger for residential development land.

A 15,543 sq ft plot at Sembawang Place was knocked down at a price of S$6.1 million, while an 11,940 sq ft plot at Salang Road was sold at S$5.2 million. 

Outlook: Property Auction Activities Expected to Stay Buoyant in 2H 2010, Led by Owners’ Sale
Ms Ng concludes, “Amid an improving economy and employment market, the number of properties put up for sale via auction is expected to stay high, with owners’ sale continuing to dominate and mortgagee sale remaining low. 

In particular, the property auction market could see a substantial number of sub-sales by owners of properties that are approaching Temporary Occupation Permit.  Interest for such properties tends to be high due to their near-term rental generation ability, as well as near-term owner-occupation opportunity. 

Buying interest at auction is expected to stay keen – given the high liquidity in the market, low interest rate environment and the popularity of real estate as an investment to hedge against inflation.” 

About Colliers International

Colliers International is a global affiliation of independently owned commercial real estate firms. The organization's 15,000 employees span the world in 480 offices in 61 countries. On a worldwide basis, Colliers manages 2.4 billion square feet, and has revenue of $US 1.9 billion.

Contact Information

Ms Seah Li Ching
Assistant Manager, Marketing & Communications
Tel: 65 6223 2323
Direct: 65 6531 8545

Ms Grace Ng
Deputy Managing Director (Agency and Business Services)
Tel: 65 6223 2323
Direct: 65 6531 8500

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