According to the latest figures released by Colliers International, more high-end homes surfaced at the auction scene during the first three months of 2010, mostly involving owner sales.
Properties that changed hands in the first quarter reached to about $13.4 million – higher than in any quarter of 2009.
Meanwhile, the total value of properties auctioned in Q1 2010 surged to $45.3 million, up by some 16 percent from the preceding quarter and 2.5 times higher than the $17.94 million in Q1 2009.
Grace Ng, deputy managing director (agency and business services) and auctioneer at Colliers, said that the upmarket homes have seen strong demand both from Singaporeans and foreigners like Indonesians and Malaysians.
Ms. Ng defines high-end residential properties as good-quality and prestigious developments in prime areas. She added that high-end homes situated near the IRs and apartments in the CBD area as well as around Tanjong Pagar were well received in the first quarter.
“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,” she said.
Residential properties accounted for 51 percent of auction sales in the first quarter of the year.
Mok Sze Sze, head of auctions at Jones Lang LaSalle, also observed the increasing demand for both industrial and commercial properties at JLL’s auctions in Q1. She attributed this to the stabilizing office rents and to people looking to take advantage of higher rental returns attributed to the commercial property market.
Colliers figures also showed that about 83 percent of the total 160 properties put on the auction block during the first quarter were offered by their owners. However, the number of mortgagee properties put up for auction was still low in view of the improving job market and recovering economy.
Ms. Ng said that with the strong participation on the auction floor and the keen interest from foreign bidders for high-end properties, the auctions in the first quarter of this year were marked by a more positive market sentiment and stronger appetite for property investment, compared with last year’s auctions.
“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,” said Ms. Ng.
The total value of properties sold during the auction in March surged to nearly $20.4 million, compared with only $9.1 million in February and $15.8 million in January.
“There is general interest from Singaporeans to park their money in properties due to high liquidity and paltry returns on bank deposits,” she added.
Some auctioneers reckoned that owner sales will continue to dominate auctions.
However, owners are jacking up prices following the price increases achieved by property developers. “In some cases, owners are asking around 20 percent above valuation,” said Ms Ng.
Shaun Poh, senior director of auction & investment advisory services at DTZ, said that the buyer-seller price gap for auction properties has widened to 10 percent to 15 percent from five percent to 10 percent in Q3 2009. “This is the single biggest challenge for the auction market.”
As buyers have been drawn to property launches, enquiries for residential properties put up for auctions have moderated in the past few weeks.
“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,” said Mr. Poh.