Success rates of auctions hit 3.5% in 1Q2021, better than in 2019: Knight Frank

By Charlene Chin
/ EdgeProp Singapore |
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SINGAPORE (EDGEPROP) - The success rates of property auctions, based on auctions listings, hit 3.5% in 1Q2021, higher than in the pre-Covid-19 period in 2019 when quarterly success rates hovered between 1% and 3%, says Knight Frank.
The research consultancy attributes the success rate over the quarter to auction properties continuing to garner interest among opportunistic retail investors looking for viable yields in a low interest rate environment.
Altogether, there were a total of 201 listings (which include repeat listings and exclude those sold outside of auctions) in 1Q2021. This is largely similar to the 198 listings in 4Q2020 when auctions resumed in full swing, it highlights.
However, while total listings remained somewhat stable, retail asset listings in 1Q2021 recorded a q-o-q increase to 67, from 38. Meanwhile industrial listings fell q-o-q to 38, from 60.

Mortgagee sales make up 60.7% of total auctions

In 1Q2021, there were 122 mortgage sale listings, constituting 60.7% of total auctions. This is somewhat similar to the previous quarter, where mortgage sales constituted 61.6% of total auctions.
Residential properties made up 45.9% or 56 of mortgagee sale listings, of which 43 were non-landed and 13 were landed home listings.
“Buyers’ interest in landed units remained strong, with a semi-detached home in Aida Street transacting at almost $500,000 higher than the opening price,” says Knight Frank.
A condominium unit at Melville Park was sold for $690,000 during an auction.
On the other hand, industrial mortgagee listings declined to 25 in 1Q2021, from 41 in the preceding quarter.
Among the successful transactions, a freehold unit at B2 factory M Space sold for $808,000 during an auction.
Knight Frank notes: “Improved prospects and optimism in the industrial sector led to more enquiries and viewings, especially for industrial units with a relatively affordable quantum of
below $1 million.” It adds that “with the opening prices of 16 of the 25 listings going at or below $1 million, success rates will likely increase in subsequent auctions”.
Meanwhile, retail mortgagee sale listings increased by 64% q-o-q and 57.7% y-o-y to 41 in 1Q2021, the highest quarterly total in Knight Frank’s records, as some investors struggled
with mortgage payments.
Despite that, it notes that “opportunistic buyers are still active”, with two units at Golden Mile Complex snapped up for a total of $610,000, likely in view of their “en bloc potential”.

Owner sale listings in retail double

Under owner sales, listings in the retail sector doubled to 26 in 1Q2021, from 13 in 4Q2020. Although opening prices for some listings dropped due to varying individual reasons, distress sales were not evident, says Knight Frank.
Altogether, there were a total of 76 owner sale listings over the quarter, slightly more than the 71 in 4Q2020. To that end, Knight Frank observes that “more individual owners have and currently are divesting their properties through auction with 36 owner listings in March, up from a monthly average of 22 from October 2020 (when up to 50 people were allowed at auctions) to February 2021”.
There were were 36 residential owner sale listings in 1Q2021, comprising eight landed and 28 non-landed listings. All eight landed properties had opening prices of above $2.7 million. For non-landed properties, eight were in Districts 9 and 10, and ranged from a 2,800 sq ft penthouse unit in Leonie Hill Residences going at $5.0 million, to smaller one-bedders under 550 sq ft at Sophia Hills and Vida with starting prices of under $1.2 million.

Interest in auction properties likely to grow in coming months

Looking ahead, Knight Frank expects purchasing interest and enquiries for auction properties to grow in the coming months, especially from Singaporeans with an investment preference for holding real property instead of other alternative investment instruments.
“Properties with unique characteristics and/or in good locations that offer rare opportunities are more than likely to be sold under the hammer, as buyer demand strengthens with the recovering economy,” it adds.
It foresees that more listings will surface, “especially for the harder-hit sectors in 2020’s pandemic-led recession”.
“Some distressed commercial properties might then be bought by both corporate and private wealth in search of attractive opportunities for more unique properties (such as strata office space or landed homes), or SMEs buying business space for their own use,” highlights Knight Frank.
For the rest of 2021, it expects the auction success rate to hit around 5% of total listings.

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