How did Singapore’s auction market perform in Q3?

Auction listings increased by 11.0% QoQ to 131 listings in the quarter.

According to Knight Frank, despite the current climate of uncertainty, mortgagee sale listings have fallen, in part due to the encouraging conversion rate at auctions. In addition, as property prices in most sectors remain on the rise, there is less urgency for most banks to commence foreclosure proceedings. 

“At the same time, with the declining sigma of auctions in the modern real estate market, contemporary real estate owners are leveraging the process to gain more attention for their properties, open to the opportunity of serendipitous bidding among discerning buyers. Given the success rates in the first three quarters of 2022, there is every chance that the success rate will surpass the original 5% projected at the start of the year,” Knight Frank said.

Here’s more from Knight Frank:

Auction listings increased by 11.0% quarter-on-quarter (QoQ) to 131 listings (including repeat listings and excluding properties sold outside of auction) in Q3 2022. Whilst mortgagee sale listings declined 44% QoQ to 28 in the quarter, owner sale listings recorded a 46.8% QoQ jump to 91 from the 62 listings in Q2 2022, and 7.1% increase year-on-year (YoY) from the 85 listings in Q3 2021. 

An increase in retail and shophouse listings contributed largely to the overall growth in listings in Q3 2022, with retail listings increasing 45.8% q-o-q to 35 listings. Also, shophouse listings soared some 600% QoQ to seven in the same period from the sole listing in Q2 2022. · 

Success rates remained positive at 6.9% in Q3 2022 as a total of nine properties were knocked down representing a gross sales value of $18.9m. In comparison to Q2 2022, transactions via an auction sale declined from 12 to nine. Nevertheless, eight out of the nine were new listings, showing the overall efficacy of a property sale through the auction process.

In mortgagee sales, there were 28 mortgagee sale listings, with six mortgagee properties sold during auction in Q3 2022. The decline in mortgagee listings was observed across all segments, with the office sector falling the most from seven to two. Listings for residential and industrial properties also decreased by 41.4% and 44.4% QoQ to 17 and five respectively. 

Given the limited landed housing inventory in Singapore, two newly listed landed terrace homes in the suburban region were highly sought-after and knocked down at a gain of 3.3% to 6.7% above the opening price. 

Three of the six mortgagee properties sold during the auction this quarter were freehold shops. The looming headwinds of inflation, rising interest rates and other economic worries did not deter the interest of potential buyers, as two of these shops were sold between 5.8% and 12.7% above the opening price. With the recovery in the retail sector gaining traction after the removal of gathering limits as well as the inflow of tourists with reopened borders without quarantine restrictions, entrepreneurs and investors might be on the lookout for opportunities in the retail and F&B space.

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Lastly, amongst owner sale listings, most property types increased from the previous quarter as public belief in the auction process grew. In the post-pandemic era, private property owners are increasingly becoming aware of the practical benefits of an auction with its public reach, as owner sale listings surged 46.8% QoQ to 91 in Q3 2022. 

Residential listings rose from 22 to 30, and industrial listings rose from 13 to 20 during the quarter. Also in the same period, retail listings rose from 19 to 31 while shophouse listings expanded from one to six. A 99-year leasehold 2-storey detached house situated along Pasir Ris Avenue was successfully auctioned at $3.6m, some 20.8% higher than the opening price of $2.98m. 

Additionally, a B1 ramp-up factory in Ark @ Gambas was also knocked down with a 20.8% premium, at an opening price of $650k eventually selling for $785k. Not only is there a possibility for unexpected interest at an auction translating to higher bids, but successful sales among private owners outside the auction are also common once these properties have been made public because of the process.

Other types of sales were also successful at auction. A liquidator sale of remnant land situated along Balestier Road, and zoned for mixed commercial and residential development, garnered the interest of many bidders. Auctioned by Knight Frank Singapore, this land parcel was eventually sold at $1.14m, 200.0% above the opening price of $380k. Located adjacent to Giffard Mansion, which has the potential for a collective sale, the site drew heated bids from investors with an eye to combining both plots. Separately, a receiver sale of a 90-year leasehold HDB shophouse with living quarters was sold at $3.43m, 7.2% above the initial opening price of $3.20m.