Hungry Ghost spooks property auctions

Business Times: Tue, Aug 30
IT WAS a quiet Hungry Ghost Festival this year for the property auction market in Singapore as few investors put up their properties for sale.

A total of 34 properties were put up for auction during the lunar seventh month in 2011, according to data from Colliers International. And only one property was sold for $1.66 million.

This is comparable to the Hungry Ghost Festival in 1998 during the Asian Financial Crisis. Then, 29 properties were put up for auction sale and two were sold for $1.65 million.

In 2010, in comparison, 51 properties were put up for sale during the festival and three of them were sold for $5.23 million.

‘The Hungry Ghost Festival this year sees the second lowest number of properties put up for sale in 14 years; the lowest was in 1998,’ said Grace Ng, deputy managing director of Colliers International. She attributed this mainly to current market conditions and buyers’ sentiment, instead of the superstition associated with the lunar seventh month.

‘It was observed that some owners have temporarily halted their plans of putting their residential properties for sale in the market now, as buyers are waiting on the sidelines in the hope of securing a better bargain,’ Ms Ng added. ‘Instead, many owners prefer to now rent out their properties to generate a better yield, as compared to depositing the money in the bank which earns them a paltry interest of less than one per cent per annum. Additionally, properties are usually viewed as a good hedge against inflation.’

The single property that was sold during the Hungry Ghost Festival this year was a terrace house at Da Silva Lane at Serangoon.

For 2011 to date, the total sale value achieved at auctions has reached $80.4 million, which is a third of the $223.9 million achieved last year. It is expected that the total sales value for the entire year would exceed $110 million, Colliers said.

The firm expects commercial and industrial properties to continue to be a favourite with property investors, as these two asset classes have a stable return of 4 to 7 per cent as well as the advantages of a higher loan-to-value ratio and the exemption of sellers’ stamp duty.

On the other hand, given that the luxury residential sector is slowing down, the sale of high-end properties this year is unlikely to be as buoyant as in 2010. Last year saw a total sales value of $57.44 million contributed by the sale of four good class bungalows.

Source: Business Times © Singapore Press Holdings Ltd.

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