Sentiment in the property market remains to be high as the preliminary data showed Q3 investment sales are 13 percent higher than Q2. Jones Lang LaSalle said yesterday that the data for Q3 indicates that the total for investment sales to date is $1.83 billion.
Meanwhile, Colliers International said 14 properties were auctioned for a three-year high of $25.92 million total during the month-long Hungry Ghost Festival. Auction sales exceeded the $22.75 million from last year with a noteworthy 53.28 percent of the total sales amounting to $13.81 coming from four sites auctioned by the Singapore Land Authority (SLA).
Investment sales surged in Q3 2009 as the growth of the residential market sector continued. The amount of $958 million, or 52 percent of total investment sales, came from the residential market sector. For example, 24 units of Good Class Bungalows (GCB) were sold for $413.5 million total. There were also 47 other landed residential sales worth over $5 million for a total amount of $408 million.
The activity in the GCB market has picked up as more home owners put their properties up for sale in the hopes of cashing in on the current increased levels of prices and interest.
As proof of the harsher economic climate, the majority of Q3 investment transactions were concluded under $100 million. The only exemptions were two big commercial sales that involved real estate investment trusts (REITs). Suntec Convention Centre was taken in by the ARA Harmony Fund for $235 million. Meanwhile, K-REIT acquired six floors of the Prudential Towers at $106.3 million. Suntec REIT owns a 20 percent stake in ARA Harmony Fund while K-REIT partly owns the Prudential Towers.
“The encouraging performance of investment sales is testament to the liquidity still available in the market. Along with improving economic sentiment, the market is expected to improve, with more transactions expected by the end of the year,” said in it report.
Grace Ng, the deputy managing director at Colliers International, said it is heartening that the total amounts of auction sales have been increasing since March, boosted by indicators of economic resurgence, better market sentiment, and the optimistic stock market. “We even saw a steady stream of buyers and investors at auctions during the Hungry Ghost Festival, which is traditionally a lull period,” Ng said.
“Mirroring the trend in the general property market and buoyant sales at residential launches, the auction market similarly chalked up $18.98 million of sales from the residential sector Not only is this almost two-thirds of total sale value, it is also the highest value registered for residential sales during Hungry Ghost Festival in the past three years,” Collier said.
“Going forward, we believe the residential sector will remain the most active sector as buyers and investors seek out condominiums and landed homes at auctions. The recent withdrawal of the interest absorption scheme and interest-only housing loans will have minimal impact, as these schemes are not applicable to the secondary market,” Ng said.
“However, it is expected that sales will taper off in the final two months due to year-end school holidays and festivities,” she added.