Published July 1, 2010

Auctions likely to pick up steam: Colliers

46 properties were sold at auction in H1 2010, with a total sale value of $87m


THE local property auction scene is likely to keep buzzing amid the improving economic climate, interest in properties approaching Temporary Occupation Permit (TOP) and low interest rates, says Colliers International.

The property consultancy released its sector outlook for the second half of the year after healthy growth in the first six months.

Its deputy managing director (agency and business services) and auctioneer Grace Ng said: 'In particular, the auction market could see a substantial number of sub-sales by owners of properties that are approaching TOP.

'Interest for such properties tends to be high due to their near-term rental generation ability, as well as near-term owner-occupation opportunity.'

According to Colliers, 46 properties were sold at auction in the first half of 2010, with a total sale value of $86.99 million.

About $72.4 million was generated from the sale of 54 properties in the same period last year.

Landed properties, in particular, pulled their weight in the first six months of this year.

Seven landed residential properties worth $20.08 million were transacted at auction, accounting for 23.1 per cent of sales value during the period.

Ms Ng said: '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 further honed their prestige attractiveness among home buyers.'

Another strong performer in the first half was retail, with nine such properties worth $20.07 million sold at auction, accounting for 23.1 per cent of the total sales value.

Ms Ng said: 'The popularity of retail properties could be attributed to the attractive rental yields that are estimated at between 5 and 6 per cent.

'This entices investors to park their funds in such properties to seek higher returns, compared with the paltry interest rate offered by most financial institutions.'

Coupled with expectations that Singapore's inflation is likely to rise to between 2.5 and 3.5 per cent this year, and high liquidity in the market, savvy investors are more likely to sniff out properties to park their funds, Ms Ng said.

'The low interest rate environment also serves as another possible push factor for buyers to take on mortgages at attractive rates,' she said.

The data provided by Colliers also shows 440 properties were put up for auction in the first six months of 2010, matching the number auctioned in the same period last year.

Of the 440 properties, 378 were put up by owners - higher than the 337 in 2009. The other 62 were mortgagee sales.

According to Colliers, this fall in mortgagee sales shows the vastly improved financial position of mortgagors on the back of a buoyant economy, falling unemployment and continued low interest rates.