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POOR attendance at auctions in May and June, apparently because of the stock market rout and the World Cup, nearly halved the total value of properties sold at auction from $70.12 million in the first quarter to $37.35 million this quarter, according to the latest figures from Colliers International.

Sales at auction are down further this quarter because of the absence of large transactions such as development sites and good-class bungalows at auctions.

But it should be a different story for the third quarter, says Colliers' executive director and veteran auctioneer Grace Ng. She predicts the total auction sales value for Q3 may exceed $100 million - which would be the highest quarterly figure in seven years.

STYL not found The big jump in Q3 is expected to be achieved from several high-value properties being put up for sale by their owners. 'The most high-profile of these, of course, will be the auction of 12 bungalow parcels at Sentosa Cove's Southern Residential Precinct on Aug 25,' Ms Ng says.

Market watchers reckon that assuming the bungalow plots fetch $5 million on average, the total tally from that auction alone would be $60 million. Another owners' auction on July 21 will see 11 strata units at Automobile MegaMart at Ubi Avenue 2 go under the hammer.

Colliers' Q2 auction report also reinforced the growing willingness of owners to sell their property by auction. The number of properties put up for auction by owners more than doubled to 176 in the April-June quarter, from 83 in the preceding quarter.

Mortgagee properties still continued to dominate the auction market, with 428 properties going under the hammer in the second quarter, although this represents a more modest 9.5 per cent increase over the preceding quarter.

'These days, owners realise that auction is a faster method of selling a property because of the accompanying publicity. As well, auction is starting to lose its stigma of being associated with mortgagee or distressed sales,' Ms Ng says.

Over a one-year period, the number of properties put up for auction by owners has risen 93 per cent from 91 in Q2 last year to 176 this year, while the number of mortgagee properties has declined 31 per cent from 621 in Q2 2005 to 428 this year.

In terms of actual auction sales value during Q2, there was an increase for shophouses, offices and industrial properties but a decline for the investment and residential sectors.

Colliers said the number of repossessed HDB shops and hawker stalls put up for sale through auction remained high.

'The situation could be caused by the existence of suburban malls offering a wide variety of products under one roof. Such malls have drawn shoppers away from the traditional HDB shops, leading to a decline in business for the shop owners.'

A REDEVELOPMENT site in Collyer Quay has been launched for sale by public tender. The only site from the confirmed list of the Government Land Sales (GLS) programme for the first half of 2006, it includes Clifford Pier and the former Customs Harbour Branch Building, which have both been gazetted for conservation.

Quay attraction: An artist impression of what could come up on the site

The 2.67 ha site includes land and waterbody. It has a maximum gross floor area (GFA) of 10,000 square metres and an overall height restriction of about four storeys. The Urban Redevelopment Authority (URA) says that the winner will be allowed to build up to about 25 per cent of the total water area for additional decks, with or without buildings.

At least 40 per cent of the GFA must be used for hotel rooms or hotel-related uses. 'Hotel uses' is an addition to the previously required uses for the site. In June 2005, when the site was put on the GLS reserve list, URA said that it was intended for use as a retail and lifestyle development.

Wallace Chu, head of research at Savills Singapore, says that recent emphasis on increasing tourist arrivals may be a factor for adding a hotel component. 'It adds an additional dimension to the site.'

Whether this makes the site more attractive to developers will only be known when bids start coming in. Having a hotel component is, however, likely to reduce the number of potential bidders as any interested party will probably need some hospitality background.

Chee Hok Yean, executive vice-president and head of advisory (Asia) of Jones Lang LaSalle Hotels, thinks that the site could yield 100 hotel rooms. The prime location also suggests that the hotel would have to have a 'lifestyle concept'.

Ms Chee notes several 'challenging' constraints on the site including additional construction costs of building a structure over water.

The tender will be a 'two-envelope' bid with price and design separated. This means that there could be more emphasis placed on design. Ms Chee says: 'If the construction cost is high, tenderers will want to pay less for the land.'

(SINGAPORE) Property consultancies CB Richard Ellis and Knight Frank yesterday separately predicted that total investment sales of property in Singapore for the whole of this year will hit a record $20 billion after the market clocked up about $13 billion in the first six months.

SIA Building: Its sale for $348.88 million to a CLSA Capital Partners fund is among the latest Q2 deals

CBRE observed that the $12.9 billion first-half tally is just $600 million shy of the $13.5 billion reported for the whole of last year, which was a record figure that surpassed the previous peak of $12.72 billion in 1996 at the height of the property market boom.

Knight Frank, which released similar figures, cited JTC Corp's upcoming divestment of its industrial properties, the sale of the Sentosa integrated resort land parcel as well as new real estate investment trust (Reit) listings as among the factors that will continue to create investment sales momentum in the second half.

CBRE also expects developers to continue selective buying of residential development sites. 'Appetite for income-producing office and retail assets will remain strong, although the number of commercial transactions will be limited by the lack of properties for sale,' said CBRE executive director Jeremy Lake.

Investment sales of property - seen as a barometer of developers' and big investors' mid-to-long-term confidence in the real estate market - refer to large investment transactions like office buildings and shopping centres, as well as sites bought for development including collective sale deals. They do not cover purchases of single property units by individuals.

Giving a breakdown of the first-half performance, CBRE said that investment sales of property in Q2 reached $7.2 billion, up 25.1 per cent from the first quarter level of $5.7 billion.

The two latest deals this quarter were both handled by CBRE. One was the $348.88 million sale of SIA Building in Robinson Road to a fund managed by CLSA Capital Partners.

The other was LC Development's and Singapore Pools's $138 million sale of Paradiz Centre in Selegie Road to Lend Lease Real Estate Investments, Lehman Brothers Real Estate Partners II, and Eden Property Mauritius Investments.

Another major investment sales transaction for this quarter is the government's award of the Marina Bay integrated resort site to Las Vegas Sands for a pre-fixed land premium of $1.2 billion.

Collective sales were a major source of investment sales deals in the first-half, with a total of 30 transactions involving nearly $4 billion - double the $2 billion for the whole of last year.

Knight Frank observed that the prices developers are willing to pay for collective sales sites are often based on future home prices.

'Assuming unchanged costs and profit margins, mid-to-high-end home prices and overall developers' sales will need to exceed at least 10 per cent growth and 8,000 homes respectively per year to sustain the collective sale fever,' Knight Frank director Nicholas Mak said.

However, several factors could cool the fever, including sellers' ever-rising price expectations, developers' diminishing hunger for land, plus rising development charge rates and interest rates, he added.

Knight Frank also said that total residential investment sales (which includes private-sector originated deals like collective sales as well as sales of housing sites by the state) swelled to about $6 billion for the first half, accounting for 46 per cent of total investment sales in the period.

The first-half figure was also 62.6 per cent higher than that for the whole of 2005, Knight Frank observed.

While the $20 billion projection for investment sales property deals for full-year 2006 is significantly higher than levels seen during the previous market peak, the emergence of Reits since 2002 and their sizeable contribution to investment sales in recent years means comparisons with historical figures may not be entirely accurate, argued Mr Lake.

Reits often buy properties from their sponsors or related parties either at the time that the trusts are floated or post-listing.

For example, K-Reit Asia acquired $630.7 million in four office buildings from its sponsor Keppel Land at the time of its listing in April.

(SINGAPORE) The master developer of the upscale waterfront housing district emerging on Sentosa Cove has sold over $1 billion worth of sites for development in the district's Northern Precinct or North Cove since late 2003.

Because of the strong demand the developer, Sentosa Cove Pte Ltd (SCPL), is now moving on to sell land in its Southern Precinct or South Cove.

Rough estimates by BT show that SCPL is clearly in the money with its land sales on Sentosa Cove - to the tune of more than half a billion dollars for North Cove.

SCPL's general manager Margaret Goh said, without commenting on the profit estimate: 'It's not just about money. What we're doing here is creating a unique lifestyle of prime waterfront living in an exclusive enclave which is yet so close to the CBD. This is probably unmatched in Asia.'

'The strong demand for land parcels for development on Sentosa Cove has led us to expedite our launch plans for South Cove, and we now envisage that the various developments on Sentosa Cove will be substantially completed by 2010, two years ahead of schedule.

'In fact, the timeline for realising the entire Master Plan for Sentosa Island, including the integrated resort, has also been brought forward from 2012 to 2010.'

South Cove is generally regarded as more prime as it faces the Southern Islands, compared with North Cove, part of which overlooks the Tanjong Pagar and Pulau Brani container terminals.

To date, SCPL has sold land parcels that can be developed into 88 per cent of the total 1,528 homes planned for North Cove.

It plans to finish selling the remaining land in North Cove by the end of Q3 this year.

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