Good-class bungalows join the party as auctions raise cheer

The value of properties sold at auctions rose 33 per cent to $223.9 million this year.

Sun, Dec 19, 2010
The Business Times

By Kalpana Rashiwala

SINGAPORE - Property auctions went more upmarket this year, with several good class bungalows going under the hammer and a changing breed of buyers bidding to snap up real estate.

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.

This article was first published in The Business Times.