Mortgagee listings plunge 83% in 4Q11

Sluggish activity indicates that auctions are no longer an exit strategy for distressed properties.

4Q11’s figure represents the lowest point in mortgagee listings since 1Q09.

In contrast, just two quarters earlier, Jones Lang LaSalle Auction brokered the sale of a commercial property worth S$6.6 million.

With buyers possibly holding off major decisions till after the year end celebrations, the 4Q11 results showed similar seasonal trend with transactions remaining at 3Q11 levels.

However, on an annual basis, the decline in transactions this quarter was more moderate at only 33 per cent, compared to the 40 per cent in 4Q10.

Jones Lang La Salle said the higher than expected proportion of auctions sold this quarter suggests a stabilization of the auctions market, with 7 out of 71 properties listed for auctions this quarter sold. This is an increase of 4 percentage points compared to the 6% recorded in 3Q11.

Though residential continues to dominate transactions, the property adviser noted that investors are increasingly diversifying to other property sectors which offer greater access to funds through higher Loan-To-Value ratios and yields.

Compared to 4Q10, the proportion of residential sales fell by approximately 15 percentage points, contributing to 43 per cent of all transactions.

Mok Sze Sze, Head of Auctions at Jones Lang LaSalle said, “The property buying market seems deep with a healthy sale rate of 10 per cent this quarter. Despite the cooling measures, residential continues to dominate auction sales.

However, this trend may be subdued in 2012 as the policy takes effect, with investors possibly shifting focus to alternative property sectors in search for higher yields,” she noted.