Friday, April 9, 2010

High-end home auctions hit $13m in Q1

This exceeds any quarter of 2009, says Colliers Int’l

More high-end homes surfaced at auctions in the first quarter of this year, mostly involving owner sales, the latest figures from Colliers International show.

About $13.4 million of such properties changed hands at auctions in Q1, higher than any quarter of last year.

The total value of all properties sold at auctions in the first three months of this year, meanwhile, surged to $45.3 million. This is an increase of about 16 per cent from the preceding quarter and 2.5 times the $17.94 million in Q1 last year.

Upmarket homes have been drawing bids not just from Singaporeans but also foreigners such as Malaysians and Indonesians, says Grace Ng, deputy managing director (agency and business services) and auctioneer at Colliers.

She defines high-end residential properties as prestigious and good-quality developments in prime locations. Ms Ng also said high-end homes located near the integrated resorts and apartments in the central business district (CBD) and around Tanjong Pagar were well sought after in Q1.

‘The strong market response seen for new projects such as 76 Shenton has spilled over to other residential developments in the vicinity such as Icon, One Shenton, as well as apartments in older developments like International Plaza,’ Ms Ng reckons.

Residential properties made up 51 per cent of auction sales in the first three months of the year.

Jones Lang LaSalle head of auctions Mok Sze Sze has also observed an increase in demand for both commercial and industrial properties at her firm’s auctions in Q1. She attributes this to office rents starting to stabilise and people looking to take advantage of higher rental returns attributed to commercial property.

Owner sales continued to dominate auctions. Colliers figures show that nearly 83 per cent of the total 160 properties put on the auction block in Q1 2010 were offered by their owners. The number of mortgagee properties put up for auction remained low in view of continued economic recovery and improvement in the job market.

Ms Ng says that compared with the same period last year, auctions in Q1 this year were marked by more positive market sentiment and a stronger appetite for property investment, with healthy participation on the auction floor and interest even from foreign bidders for high-end properties.

‘In Q1 2009, when the property market was still reeling from the effects of the financial crisis, auction rooms were packed but buyers were looking for bargains. So bidding levels and activity were low and there was a big price gap between sellers and buyers,’ she recalls.

The total value of properties sold at auction rose from about $15.8 million in January and $9.1 million in February this year to nearly $20.4 million in March.

‘There is general interest from Singaporeans to park their money in properties due to high liquidity and paltry returns on bank deposits,’ says Ms Ng.

Owner sales will continue to dominate auctions, say auctioneers.

However, owners are jacking up prices following the price increases achieved by developers. ‘In some cases, owners are asking around 20 per cent above valuation,’ according to Ms Ng.

Shaun Poh, DTZ senior director of auction & investment advisory services, says the buyer-seller price gap for auction properties has widened from about 5-10 per cent in Q3 last year to 10-15 per cent currently. ‘This is the single biggest challenge for the auction market.’

Enquiries for residential properties put up for auction have quietened down significantly in the past few weeks as buyers have been drawn to property launches.

‘Financing packages are also more attractive for new properties at launches than for completed ones, so it’s easier on the wallet to buy a home from a developer than through an auction,’ Mr Poh notes.

Source: Business Times, 9 Apr 2010

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