Property auctions market still sluggish

Auctions are no longer an exit strategy for distressed properties, as sluggish mortgagee listings for Q4 2011 reached their lowest since Q1 2009.

In contrast, Jones Lang LaSalle (JLL) Auction brokered the sale of a S$6.6 million commercial property two quarters earlier.

As buyers may have placed major decisions on hold until after the year-end celebrations, similar seasonal trends were seen between Q3 and Q4 2011.

Still, on an annual basis, Q4 2011’s weakening transactions, at only 33 percent, were more moderate than Q4 2010’s 40 percent.

The higher-than-expected proportion of auctions during the quarter reflected a stabilisation of the auctions market. Seven out of 71 auctions-listed properties were sold –– an increase of four percentage points from Q3 2011.

Although the residential market still dominates transactions, investors are diversifying to other property sectors which offer greater access to funds via higher Loan-To-Value (LTV) yields and ratios.

Compared to Q4 2010, the proportion of residential sales fell by approximately 15 percentage points, accounting for 43 percent of all transactions.

“The property buying market seems deep with a healthy sale rate of 10 percent this quarter. Despite the cooling measures, residential continues to dominate auction sales,” said Mok Sze Sze, Head of Auctions at JLL.

“However, this trend may be subdued in 2012 as the policy takes effect, with investors possibly shifting focus to alternative property sectors in search for higher yields,” she added.

Source : PropertyGuru – 4 Jan 2012

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