Auction listings decline 3% q-o-q in 1Q2023: Knight Frank
By Jennifer Venkat
/ EdgeProp Singapore |
St Regis Hotel & Residences (Photo: Samuel Isaac Chua/EdgeProp Singapore)
SINGAPORE (EDGEPROP) - Auction listings saw a decline of 3.0% q-o-q to 96 listings in 1Q2023, according to a research report by Knight Frank. This includes repeat listings and excludes properties sold outside of auction. The fall is partly attributed to the Chinese New Year festivities when some auction activities were postponed, says Sharon Lee, head of auction & sales at Knight Frank Singapore.
Owner listings outnumbered mortgagee listings in 1Q2023, continuing a trend that started in 2Q2022, Lee highlights. On a y-o-y basis, the total number of auction listings increased 20% from 80 listings in 1Q2022.
The drop in overall listings in 1Q2023 came in tandem with a more moderate success rate of 6.3% in 1Q2023, or six properties sold. In comparison, the auction market saw a success rate of 9.1% in 4Q2022, when total listings numbered 99.
Residential properties constituted 46.9% (45) of the total listings in 1Q2023. Of these, 18 were mortgagee listings while 20 were owner listings. Other types of sales (including estate, receiver, and bank sales) made up the remaining seven listings. Notably, a non-landed home located in St Regis Residences was listed for receiver sale for two consecutive months, and eventually sold outside of auction for $13.5 million.
Mortgagee listings surged more than three times from 10 in 4Q2022 to 32 in 1Q2023, with an increase observed across all property types. There were 18 residential mortgagee listings – more than twice the eight listings registered in the previous quarter. But despite this q-o-q increase, residential mortgagee listings were 14.3% lower y-o-y than the 21 recorded in 1Q2022.
Retail and office mortgagee listings increased to four and three respectively in 1Q2023, compared to 4Q2022 when no commercial properties were listed. Industrial mortgagee listings tripled from two in 4Q2022 to seven in 1Q2023. The increase could be attributed to the progressively tough business climate affected by global economic disruptions, widespread inflation and rising interest rates, observes Lee.
Of the 32 mortgagee listings in 1Q2023, six were successfully auctioned. The properties consisted of small quantum listings, with transactions ranging from $350,000 to $1.12 million. Five of the properties were sold either at a discount or close to their opening price, while one property – an office unit in Paya Lebar Square – transacted at $1.12 million, 1.8% higher than the opening bid of $1.1 million.
Meanwhile, owner listings totalled 57 in 1Q2023, dipping from the 72 logged in the previous quarter. Nonetheless, the figure is more than double the 28 listings seen in the corresponding quarter of the previous year. It also marks a fourth consecutive quarter that owner listings exceeded mortgagee sale listings.
Knight Frank’s Lee attributes the trend to owners who are choosing to harness the auction platform to garner more interest for their property. “Increasingly, the past success rates at auctions have boosted the confidence of some owners who are taking the opportunity to market their property, with every possibility of selling at preferred prices before or after the auction as a result of the public exposure and marketing coverage,” she explains.
For example, a four-bedroom apartment at Bayshore Park was first listed by an owner for auction in October 2022. It was eventually sold after auction in February 2023 when buyer interest was aroused through auction channels.
There were 20 residential owner listings in 1Q2023, lower than 29 in the previous quarter, but higher than seven in the same period last year. Retail and industrial owner listings increased to 19 and 10 listings respectively in 1Q2023. This was an increase from the 17 and nine listings in 4Q2022. Office owner listings dropped 14.3% q-o-q to six in 1Q2023. This was 50% higher y-o-y than the four in 1Q2022.
Overall, with the general deteriorating business sentiment and cost pressures on operations, more business owners might find it challenging to keep their businesses above water, says Lee. According to the Ministry of Law, there were a total of 959 bankruptcy applications between January and March. This was 5.6% higher q-o-q and 22.2% higher y-oy. Going forward, the higher number of bankruptcy applications filed would likely result in more mortgagee listings, especially for workplace properties, in the second half of the year, Lee opines.
At the same time, the growing popularity of auctions among owners will also create more listings. Owners would be drawn to the possibilities of “serendipitous bidding” among discerning buyers, says Lee. Knight Frank maintains the overall success rates at auctions for the whole of 2023 to be around 5% to 7%.
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