Hammering out the Singapore auction stigmaDecember 6, 2018 / By
Mention property auctions and most Singaporeans would think of foreclosed properties whose owners can no longer pay the mortgage. In Singapore, auction properties have long been labelled with the “stigma sticker” where the properties are inauspicious, on significant discounts or foreclosures.
This misconception is, however, wildly inaccurate, as borne out by JLL’s statistics.
Firstly, on average, mortgagee listings constituted just 30% or less of all auction listings between 2012 and 2018. In contrast, listings by owners (non-foreclosure properties) contributed the bulk, or above 70% of all auction listings annually between the same time period, reaching a high of 90% in 2013.
Secondly, auction is gaining traction with high net worth individuals as an effective mode of asset disposal. Since 2010, at least one in ten owner auction listings annually is for properties worth SGD 5 million and above. This surged to one in every four properties in the first ten months of 2018.
Figure 1: Proportion of owner auction listings with opening price of SGD 5 mil and above
Source : JLL Research
Notable high-value owner auction deals included the sale of Good Class Bungalows (GCBs) at Chestnut Drive for SGD 11.4 million in 2017, another at Chee Hoon Avenue for SGD 22.9 million in 2013 and one within the White House Park area for SGD 13.6 million in 2010. These were sealed at 13-26% above their respective opening bids.
High-value auction transactions involving other asset classes included the SGD 15.2 million sale of three vacant residential land parcels in 2016; a row of shophouses that sold for SGD 14.6 million in 2015; and an industrial property at Benoi Road that went for SGD 25.6 million (60% above its opening price) in 2013.
Even developers and landowners view auction as an effective mode of sale. For example, in 2006, Sentosa Development Corporation sold 12 oceanfront bungalow land parcels on the prestigious resort island of Sentosa Cove through an international auction for SGD 5.56-8.15 million each. Frenzied biddings amid keen competition for the coveted land parcels resulted in benchmark land prices set.
In 2007, in what was a first auction held for an uncompleted development in Singapore, Tuan Sing Holdings successfully sold all 12 balance units in the 34-unit luxury condominium, Botanika, at prices ranging from SGD 3.05-5.63 million each. Benchmark unit prices were reportedly set for the area at this auction.
More recently, the developers of prime condominium development Suites @ Newton placed two units for auction in 2015. Two seafront bungalows at Wak Hassan Drive were also put up for auction by their developer in 2017 with opening bid prices of above SGD 5 million each. 2018 saw the developer of Victory Ville putting up three of their eight semi-detached houses for auction in 2018 at opening bid prices of SGD 2.4 million and above each.
As seen in Singapore, there is a growing trend of owners of high-end properties turning towards auction as a form of sale. It is hoped that as the negative light of auction properties begin to dim, more buyers will turn to it as a possible mean of acquiring assets in Singapore. It is, after all, a transparent and speedy mode of acquisition.
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