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News Release

Singapore

Commercial and Industrial Properties Driving Auctions Market in Q1.



SINGAPORE, 2 April 2012 – While residential still forms the majority of properties put up for auctions, an increasing number of commercial and industrial property purchases are picking up the slack in the residential market. These non-residential sectors still offer investors greater access to funds through higher loan-to-value ratios and yields.

In 1Q12, a total of three properties were sold during auctions. Notably lacking were residential properties, with all except one of the transacted properties being in the commercial and industrial sector. This is in stark contrast to 14 (out of 23) and 5 (out of 17) residential properties sold in similar first quarter periods of 2010 and 2011 respectively.

In comparison to similar first quarter periods in 2010 and 2011 when success rates were 18 per cent and 14 per cent respectively, the rate this quarter has been dismally low. This could be attributed to the recent global market uncertainties and buyers’ preferring to wait out for clearer signals before making any decision.   

Mok Sze Sze, head of auctions at Jones Lang LaSalle, said: 'The property buying market seems to have come off the healthier sales rate of 10 per cent last quarter, which is no surprise given the weaker overall sentiment, but there has still been strong demand for industrial and commercial properties.’

Among the properties sold this quarter, the sale of a petrol station along Jalan Ahmad Ibrahim by JLL garnered greatest interest from the auction crowd, with the transacted price 32 per cent higher than its initial price of $9.61 million. Shell Eastern Petroleum (Pte) Ltd won the site at $12.73 million, adding to their portfolio.

Ms Mok adds, ‘We expect industrial and commercial properties to continue their strong showing as we see a return of primary demand from occupiers/operators into the auction market.  We have already seen this trend emerging with the majority of properties in 1Q12 being of industrial and commercial uses.’

“Auction sales of private residential properties is likely to pick up pace later on this year, as both buyers and sellers realign their expectations following a clearer market direction since the cooling measures implemented in December 2011.” She added.