Colliers International, Singapore

Contrary to the traditional taboos associated with property purchase during the Hungry Ghost festival, this year’s Hungry Ghost month (August 1-30, 2008) saw a total of 12 sales worth S$22.747 million. Not only is this 37 per cent higher than the S$9.56 million recorded during the Hungry Ghost month last year, it is also the highest sale value achieved by month in Year 2008.

A total of 66 properties were put up for auction sale in August 2008. The high sale value of S$22.747 million achieved in the month is mainly contributed by the successful auction sale of four residential infill land sites by the Singapore Land Authority for S$13.81 million. 

Ms Grace Ng, Deputy Managing Director (Agency and Business Services) and Auctioneer of Colliers International, says, “Despite the fact that the Hungry Ghost month falls in August, the month actually registered the highest sale value by far in Year 2008, surpassing the next highest sale value of S$11.35 million seen for June 2008. This further confirms that buyers will defy traditional taboos and will commit to a purchase so long as the price and location – among other factors – are right.”

Highlights:

Stronger interest seen for commercial and industrial properties than residential properties

Five strata-titled shop/office/industrial units were sold at auction during the Hungry Ghost month this year for a total of S$5.42 million, while three residential properties were sold for a total of S$3.515 million. This reflects a strong interest from both owner-occupiers and investors in commercial and industrial properties.

Similarly, during the same period in Year 2007, a total of S$5.49 million worth of commercial and industrial properties were sold under the hammer, exceeding the sale value of residential properties by 35%.

In contrast, during the same period in Year 2006 and 2005 when the market was buoyant, the total sale value achieved for residential properties far surpassed the sale value of commercial and industrial properties.  
                                                                                                               Ms Ng comments, “These observations showed that during market downturn, investors tend to shift their focus to non-residential properties. This is because commercial and industrial properties generally offer better yields than residential properties, and the limited supply has made this asset class more resilient to unattractive market conditions.

Investors are also now parking their funds in commercial properties for better yield returns than the paltry yield of less than 1% offered by banks. Additionally, the current high-rental market has resulted in some owner-occupiers purchasing their own units and converting their monthly rental payments to mortgage payments; thereby, shielding themselves from further rental increase.”

Number of properties put up for auction sale during the Hungry Ghost month continues to decline

The market witnessed a 50% drop in the total number of properties being put under the hammer during the Hungry Ghost month this year, from 131 properties in Year 2007 to 66 properties this year. 

The low figure seen this year is resultant from a decline in both the number of mortgagee sale and owners’ sale, as well as a reduction in the number of auctions conducted (from eight last year to six this year) during the period.

Lowest number of mortgagee sale seen in the past 10 years

Only 21 re-possessed properties were put up for auction sale in the market this year, compared to 43 last year. Not only is this the lowest number seen in the past 10 years, it is also a shade lower than the number of mortgagee sale in Year 1998 during which 22 such properties were put up for auction during the Hungry Ghost period.

Ms Ng says, “The decreasing number of mortgagee sale could be attributed to a high employment rate, as well as a healthy rental market amid a low-interest environment, enabling owners to better service their mortgage loan. In addition, some banks have offered various interest servicing options to help owners smoothen out any potential cash flow problems.”

Number of owners’ sale remained comparatively high

A total of 45 properties were put up by owners during the Hungry Ghost month this year.  This is the third-highest number of owners’ sale recorded in the 11-year period, from Year 1998 to Year 2008.

Ms Ng concludes, “Owners today are more inclined to use auction as a method of sale due to the several benefits it offers. Compared to a sale by private treaty which could be slow and long-drawn, auction offers the advantage of additional publicity generated by more prominent advertisements and a fixed sale date; thereby, facilitating a much faster sale process.”

About Colliers International

Colliers International is a global affiliation of independently owned commercial real estate firms. The organization's 10,092 employees span the world in 267 offices in 57 countries. On a worldwide basis, Colliers manages 672,945,918 square feet, and has revenue of $US 1,620,958,349.

Contact Information

Ms Seah Li Ching
Senior Executive, Marketing & Communications
Tel:  65 6223 2323
Direct: 65 6531 8545

Ms Grace Ng
Deputy Managing Director (Agency and Business Services)
Tel: 65 6223 2323
Direct: 65 6531 8500

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