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Property auction market rebounded in 4Q 2013: Industrial segment took the lead in number of successfully hammered auction sales

Sellers’ revision of price expectations varied while buyers adopted a cautious approach in bidding

SINGAPORE, 2 JANUARY 2014 – In 4Q13, the Singapore auction market registered a total of $3.9 million in sales closed, which denoted a 15.1% decline in quarterly sales value compared to the preceding quarter’s $4.6 million. However, the number of properties sold during auction increased from three in 3Q13 to four as at end of 4Q13. It was also noted that the 4Q13 sales value was 88.1% lower than the five-year quarterly average sales of $32.7 million, or 91.5% lower than the 10-year average quarterly sales of $46.0 million.

Comparing on an annual basis, the total number of successfully hammered properties during auction slipped by 19.2% to 21 in 2013 from a total of 26 in 2012; and the corresponding total sales value climbed significantly by 69.5% from $58.7 million in 2012 to this year’s $99.6 million. The rise in total sales value is primarily due to a higher number of large deals closed in 2013. The total sales quantum of $99.6 million in 2013 was 23.9% below the five-year average of $130.8 million, or 45.9% less than the 10-year average auction sales of $183.9 million.

The largest auction deal in 2013 was a factory at 39 Benoi Road worth $25.6 million, which was sold in February by Jones Lang LaSalle. In comparison, the largest deal in the previous year took place in January when a petrol station at 311 Jalan Ahmad Ibrahim changed hands. That deal was also closed by Jones Lang LaSalle. In the last quarter of 2013, Jones Lang LaSalle led the Singapore auction market, accounting for three out of four successfully hammered properties during auction. Overall, our auction team concluded the highest auction sales in 2013, in terms of property value, amongst all the auction houses.

It was also noted that the total number of residential properties listed in 4Q13 was higher than the combined number of industrial and commercial properties. In the past two years, residential properties put up for auction almost always took the lead, except in 4Q12, when the number of commercial properties listed surpassed that of residential properties by a mere two. Jones Lang LaSalle believes that an auction is the preferred sales avenue of many residential property owners. However, in the recent two quarters, properties sold during auction were all from the industrial sector with just two listed residential properties sold prior to auction.

Ms Mok Sze Sze, Head of Auction and Sales at Jones Lang LaSalle, said, “The credit tightening measures of the Total Debt Servicing Ratio (TDSR) and the Additional Buyers’ Stamp Duty (ABSD) deterred investors and were considered to be the major attributes of the rather quiet auction market in the second half of 2013. Buyers have been very cautious at this point in time, when the property market is believed to have reached an inflection point. On the other hand, most of the sellers do not seem willing to lower their price expectations. Both sides are still waiting for market clarity. Nevertheless, the majority of players believe that market fundamentals remain strong. Mild and gradual recovery is expected in the coming quarter. Increase in sales volume compared to 2013 is predicted as buyers and sellers seek ways to absorb the additional costs incurred due to the cooling measures. In the near term, the auction market is likely to gain back the sales momentum and recover at a faster pace as investment sentiment improves. Generally speaking, we expect higher success rate and better market performance in 2014.”

Auctions Transaction Performance

About Jones Lang LaSalle

Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 2.6 billion square feet and completed $63 billion in sales, acquisitions and finance transactions in 2012. Its investment management business, LaSalle Investment Management, has $46.3 billion of real estate assets under management.

Jones Lang LaSalle has over 50 years of experience in Asia Pacific, with over 26, 100 employees operating in 79 offices in 14 countries across the region. The firm was named ‘Best Property Consultancy’ in nine Asia Pacific countries at the International Property Awards Asia Pacific 2012, in association with HSBC, and was named the number one real estate advisory firm in Asia Pacific in the Euromoney Real Estate Awards 2012.

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