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Singapore property auction sales sink to 15-year low

Sales value down to S$62.435 million, notes Colliers.

"The Singapore property auction market concluded the year on a quiet note, with only 24 properties sold out of a total of 377 properties that were put up. The total sale value chalked up for 2012 is S$62.435 million," said Colliers International in its Singapore Auction Performance Year-end Rounder 2012 report.

"Not only is this 34.7 per cent lower than the S$95.624 million that was recorded last year, the total sale value is also the lowest in 15 years," Colliers added. "It is also 54 per cent lower than the total sale value of S$135.7 million that was garnered during the Asian financial crisis in 1998, and 25.4 per cent lower than the S$83.67 million recorded during the global financial crisis in 2008."

Colliers attributed the alarming decline to the recent government cooling measures which put a serious dent on sales and market interest.

Ms Grace Ng, Deputy Managing Director of Colliers International, says, “The decline in the total sale value was due to, among others, the series of cooling measures being implemented by the government in the residential sector – the latest one being effective from October 20121, which resulted in a lacklustre secondary residential market and thinner interest in the high-end/luxury residential market.”

Colliers noted that the secondary residential market has been experiencing a stalemate between the buyers and sellers.

Ms Ng continues, “We observe that owners have been reluctant to sell their properties, unless the prices fetched could possibly enable them to make another property investment. Besides, sellers now have strong holding power due to the prevailing low interest rates, as well as healthy leasing activities seen in the mass residential sector that has enabled them to service their loans.

Buyers, on the other hand, have also been reluctant to commit to high prices for properties in the secondary market due to a run-up in prices since 2009. Instead, they have adopted a “wait-and-see” attitude – in the hope for a price adjustment, in view of the continued implementation of the government’s cooling measures, Eurozone crisis and the impending slowdown in GDP growth.”

Colliers also said the low sale value at auctions for this year could be attributed to the decrease in the number of high-value transactions – those that are valued S$5 million and above.

"Only three of such properties were sold this year for a total of S$25.53 million, which is a drop of 20.4 per cent compared to S$32.06 million registered in 2011," it said. "Nonetheless, these high-value transactions contributed to 40.9 per cent of the total sale value. The three high-value properties sold this year included a petrol kiosk at Jalan Ahmand Ibrahim that was knocked down at S$12.73 million, a JTC factory at Loyang Way at S$7.1 million and an apartment in Boulevard Residences at S$5.7 million."

Colliers also gave its grim outlook for the first half of 2013.

Ms Ng concludes, “In view of continued liquidity and low interest rates, it is expected that the sellers’ market will persist into the first half of 2013. Nonetheless, buyers will continue to search for value buys in the auction market, as properties are still considered as a good hedge against the inflation rate which was at a high of 5.2 per cent in 2011 and averaged at 4.7 per cent from January to October this year.

There will still be strong interest in landed properties, as well as opportunistic purchase of properties that are located in prime areas, such as District 9, 10 and 11. Meanwhile, if the business environment deteriorates or unemployment rate increases next year, there is a possibility of a higher number of mortgagee sales in 2H 2013. Some industrial properties may emerge as mortgagee sale, when more small-and-medium-enterprises face the pressure of rising costs and a challenging business environment.

Taking the above factors into consideration, sale value at property auctions in 2013 is expected to total to approximately S$70 million.”

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