- 21 properties – including 11 mortgagee properties - were successfully sold during auction
- Auction sales value declined after a strong 2017 to SGD35.3 million from 21 deals in H1 2018
- Some investors will likely turn to strata-titled commercial units and shophouses as alternatives after new property cooling measures kicked in
- Overall auction sales projected to reach up to SGD90 million for the whole of 2018
SINGAPORE, 26 July 2018 – Colliers International (NASDAQ: CIGI; TSX: CIGI), a global leader in commercial real estate services today released its Colliers Flash report which tracked transactions and listings in the property auction market in Singapore during the first half (H1) of 2018.
The properties put up for auction jumped by 21.7% YOY to 454 listings (including re-listings) in H1 2018 – the highest level recorded since H2 2009. Listings from all sectors rose on a YOY basis during the period, with the exception of the industrial segment where listings fell by 1.1% to 87. Compared against a year ago, residential listings were up 15.8% to 234, office listings rose 30% to 13, while retail listings climbed 60.3% to 117 in the H1 2018. Three other listings were for a vacant land and two medical suites.
Mr. Steven Tan (陈添裕), Director of Capital Markets & Investment Services at Colliers International, said, “The increase in listings was partly driven by more owners opting to sell their properties via auctions and more mainstream brokerage firms entering the auction market. While owners’ listings rose sharply, mortgagee listings grew at a slower pace during the period amid the improved Singapore economy. Looking ahead, we believe mortgagee listings may plateau or rise more slowly with less distress in residential and office markets which have picked up strongly in the last two quarters. Industrial and retail property markets may also start to stabilise by end-2018.”
Slower mortgagee listings growth
With the pick-up in the economy over the past year, mortgagee listings growth moderated significantly. Colliers’ research found that there were 200 such listings in H1 2018, representing increases of 6.4% from a year ago and 8.1% from H2 2017. This is a drastic slowdown from the 28.5% and 23.7% YOY growth recorded in H2 2017 and H1 2017 respectively.
Residential properties accounted for about 60% of total mortgagee listings in H1 2018 at 121 listings, followed by 53 industrial mortgagee listings, 25 retail mortgagee listings, and one office mortgagee listing.
Owners’ listings surged
In contrast, owners’ listings rose sharply by 37.3% YOY and 3.7% from H2 2017 to 254 listings during the first six months of this year, reflecting an increased interest from owners as they believed auctions would give their properties maximum exposure and the ability to garner the best price. All sectors, except industrial, saw owners’ listings increased YOY in H1 2018.
Auction sales value declined in H1 2018
For H1 2018, the aggregate value of properties sold at auctions stood at SGD35.3 million, 23.6% lower than the SGD46.2 million transacted in H1 2017 and 42.2% down from SGD61 million in H2 2017. The decline in auction sales value was due to lower quantum per unit that were transacted during the period.
Of the 21 properties that were knocked down, 11 (or 52.4%) were mortgagee sales: comprising eight residential properties and one each from the retail, office and industrial segments.
Colliers brokered nearly a quarter of the auction sales transactions in H1 2018, selling five non-landed residential properties amounting to SGD6.8 million, with the largest deal being a condominium unit at Botanic Gardens Mansion which was sold for about SGD2.7 million.
Colliers expects overall auction listings to continue to grow in the second half of 2018, driven by increased owners’ listings across most sectors.
In view of the fresh property cooling measures – higher additional buyer’s stamp duty and lower loan-to-value limits – implemented on July 06 on residential property purchases, Colliers believes some investors could turn to strata-titled commercial units and shophouses as alternatives.
Mr. Tan added, “Despite the new cooling measures, we believe owners who had sold their homes in the past two years via collective sale are still likely to seek immediately-available replacement homes in the auction market. We would still recommend auction as a good platform to seek or sell properties for optimal exposure and pricing.”
Colliers projects higher overall auction sales in H2 2018 than in H1 2018 which should take total auction sales for the full year 2018 to SGD85-90 million. This would be lower than the SGD107 million auction sales transacted in 2017.
To download the report, click here.
1Data for auction sales exclude properties sold before or after auction sessions via private treaty.