Market observers anticipate an increase in commercial and industrial listings at property auctions
The property market is abuzz with anticipation as market observers forecast a surge in commercial and industrial listings at property auctions. This trend signals a dynamic shift in the real estate landscape, offering new opportunities for investors and businesses alike. In this article, we delve into the factors driving this increase and explore the potential implications for the property market. Join us as we unravel the dynamics of this evolving trend in property auctions.
In Singapore, market experts anticipate a rise in the number of commercial and industrial properties being auctioned off this year, reflecting the tough economic conditions. Owners and investors are expected to offload underperforming assets, creating more opportunities for buyers in the monthly property auctions conducted by real estate agencies. Investors are particularly interested in commercial units that offer promising rental income and potential profits.
LOOKING OUT FOR GOOD DEALS
These properties are often those relinquished by struggling businesses or units that have failed to attract buyers through conventional sales channels.
Daryl Ng, a property investor along with his partners, provides an example. They acquired a 990 sq ft commercial unit at Textile Centre in Jalan Sultan through the open market approximately three years ago for about S$1 million (US$0.75 million). The unit is versatile and can serve as either an office or retail space.
Currently, they have two tenants renting the space, generating a total monthly income of S$4,500.
Mr. Ng, always on the lookout for attractive deals at property auctions, emphasized the importance of factors like orientation, foot traffic, and usage when evaluating potential investments. He stated, “If these three criteria are met, we are willing to pay a fair market price. However, if they don’t align, we might offer around 10 to 15 percent less than the asking price and assess the response.”
RECOUPING CAPITAL
Real estate consultancy Knight Frank Singapore reported that a total of 360 properties were available for sale in the auction market last year. Residential properties accounted for over a quarter of these listings.
Approximately 240 properties were owner listings, indicating properties put up for sale by the owner rather than by the bank.
Out of all the properties listed, around 7 percent were successfully sold, a figure considered historically typical for the auction market. A majority of the properties sold were industrial in nature.
For the upcoming year, Knight Frank Singapore anticipates a slightly higher success rate of up to 10 percent.
Mr. Leonard Tay, Head of Research at Knight Frank Singapore, mentioned, “There’ll be listings from all sectors, we expect, particularly in the commercial and industrial sectors.”
“The challenging business environment experienced in 2023 may have posed difficulties for certain business owners, potentially leading to the decision to offload these assets in the current year to regain some capital,” remarked Mr. Tay.
The capital acquired from such sales could then be redirected towards new investments this year, “particularly if opportunities arise where prices have decreased to more realistic levels,” Mr. Tay added.
