Property auctions of $83.7m at 11-year low

December 19, 2008

By KALPANA RASHIWALA

WITH the last two property auctions for the year concluded this week,
the final tally of the value of properties sold at auctions in 2008
is $83.7 million - the lowest in 11 years, according to Colliers
International.

This year's figure is 79 per cent below last year's number of $407.4
million and 38 per cent less than the $135.7 million plumbed in 1998
during the Asian financial crisis.

Colliers pointed out that the 2008 auction sales value of $83.7
million was worse than two trough points reached in 2001 and 2004,
when auction sale values dropped to $160.5 million and $155.4
million, respectively.

All property sectors experienced a decline in their total sales value
at auctions in 2008, with the residential sector registering the
biggest drop of 88 per cent to $25.2 million from $202.4 million in
2007.

This decline was marked by a plunge in activity in the high-end
residential segment in 2008. The year saw just three prime district
properties worth a total $4.62 million changing hands at auctions -
against 24 properties that sold for $106.1 million at auctions in
2007. In contrast, mass market and mid-tier properties dominated the
list of of residential properties sold under the hammer this year.

Colliers' deputy managing director and auctioneer Grace Ng attributed
the drop in auctions sales this year to cautious buying sentiment
amid the worsening economic outlook. 'Additionally, sellers are also
holding on to their asking price. This resulted in a stalemate
between buyers and sellers, contributing to the decline in sales
value,' she added.

She predicts an increase in mortgagee sale properties at auctions
next year against the backdrop of worsening economic outlook and
expected rise in unemployment.

This could lead to a potential rise in loan default rates and raise
the number of forced sales.

Rival property consultancy Knight Frank projects an increase in the
number of properties offered for auction next year as there could be
some investors who bought their properties with the deferred payment
scheme and would need to sell their properties quickly as the
completion dates draw nearer.