Industrial auction sales soar to outperform the market in 4Q13

Industrials ignite demand as investors retreat.

The last quarter of 2013 saw industrial properties attracting bona-fide industrialists rather than investors, according to Knight Frank, which enabled the industrial sector to outperform the auction market with a success rate of 21 per cent, equivalent to four out of 19 industrial properties put up for auction were sold.

Of the 4 industrial properties that went under the hammer - one unit at Northstar @ AMK that was transacted at the opening price of $930,000; 4 units at Redhill Forum (i.e. 3 of which are bundled sale and 1 individual unit) were concluded at $1.71 million and $602,000 respectively. The 3 units of the bundle sale were sold below the opening price of $1.95 million, while the single unit was sold below the opening price of $650,000. The remaining one property which was concluded is at Eunos Techpark, which was sold at $660,000, which is $30,000 above opening price.

"While the 4Q 2013 success rate for this segment was the highest since 2Q 2011, buyers are generally cautious in their bidding prices," noted Knight Frank.

"The rising industrial property prices coupled with moderating rents are putting a lid on price expectations from sellers," it added.

The relatively high success rate for industrial auction sales was in stark contrast with the dearth of sales in the residential and shop and HDB shophouses subsegments. The success rate of residential properties in 4Q 2013 was zero despite 58 properties put up for auction, which was unprecedented going as far back as 2004.

The same goes for shop and HDB Shophouses with zero sold for the period. But Knight Frank reckoned that while there was no sale concluded for this segment during the auctions in 4Q 2013, shops and HDB shophouses tend to be sold before and after auctions.

Shophouses continue to be popular among auction buyers, argued the research firm.

"Limited supply and close proximity to immediate catchment of residents are the main contributing factors to the popularity of shops and shophouses. In addition, foreigners’ current eligibility to buy HDB shophouses would also support demand for such properties."