MORE real estate properties were listed and sold in the auction market in the third quarter of 2023, despite the slowing economy and the higher-than-longer interest rate environment, according to Knight Frank’s market update on Monday (Oct 30).

Auction listings jumped 24.4 per cent from 82 in Q2 to 102 listings in Q3 owing to an increase in both mortgagee and owner sale listings. These include repeat listings and exclude properties sold outside of auction, said Knight Frank.

Knight Frank highlighted that the increase was observed across all property segments, with residential properties accounting for the bulk at 49 per cent, or 50 listings, in Q3. Retail properties accounted for 25.5 per cent (26 listings); industrial properties followed with 19.6 per cent (20 listings); while office units comprised 5.9 per cent (six listings) out of the total listings during the quarter.

Success rates of these listings in Q3 was about 9.8 per cent, with the total gross sales value standing at S$17.8 million, up three times from the S$4.8 million transacted in Q2.

Out of the 10 properties sold, eight of them were newly listed. Knight Frank said that despite the slowing economy, fresh properties being put on the auction market continue to appeal to prospective buyers, especially “those who had been following the market long enough to to be able to identify opportunities”.

Owner sales listing rose from 57 listings in the earlier quarter to 70 listings in Q3, a 22.8 per cent increase. Year on year, however, owner sales listing declined 20.5 per cent from the 88 registered in Q3 2022.

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Knight Frank said only one property among the owner sale listing was sold during the quarter. The sale was a 60-year leasehold “Business 2” landed industrial factory located at Kaki Bukit Place, transacted at S$5 million which was 3.8 per cent below its opening price of S$5.2 million.

Despite the relatively low success rate at auction, the report said that owners are “increasingly cognisant that the auction platform can focus wider public interest and the attention of buyers in search for property”. It said this has enabled properties on the owner listings to find buyers outside of the auction process in private treaty deals after buyers were made aware of such opportunities.

Meanwhile, there were 25 residential and 24 retail owner listings in Q3, up from the 24 and 21 respectively in Q2. Office listing remained at five but industrial listings had more than doubled to 16 listings from seven in the previous quarter.

The higher number of industrial listings was due to the stressed economy causing some industrialists to offload their assets to mitigate operational cash flows, said Knight Frank.

The challenging retail scene is also forcing more strata-retail and ancillary retail spaces in suburban locations to be put up for sale, particularly those that are not in the main thoroughfares along transport nodes, with access to a stream of pedestrians/shoppers. The report said retailers are offloading their shops so as to cut their losses and pivot to other alternatives.

There were 29 mortgagee listings in the third quarter, up from the 22 in the previous quarter. 

There were five residential and three industrial properties that were successfully auctioned during Q3, added Knight Frank.

Among the five residential properties sold, four were transacted at a premium of between 0.4 per cent and 9 per cent from their opening prices while another was sold at a discount of 1.7 per cent. 

Knight Frank said family-sized units were still being sought after as most of the residential properties sold were three-bedrooms or larger units. It said that a strata-titled terrace house in The Teneriffe was sold for S$3.52 million, which fetched the highest premium of 9 per cent among all properties auctioned during the quarter.

More properties under distress may surface in the final quarter of the year, increasing the total number of listings, as higher interest rates and an uncertain economy begin to manifest in the auction market, said Sharon Lee, Knight Frank head of auction and sales.

With a success rate of 7.7 per cent for the first nine months of the year, the real estate consultancy firm predicts the knock-down rate to improve slightly and has revised the overall success rate projection at auction to between 7 per cent and 10 per cent for the whole of 2023.