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Knight Frank noted that some of the retail and industrial listings “became mortgagee sales as owners were unable to sell the property before foreclosure”.
With industrialist facing higher financial pressure, industrial property listings under mortgagee sale expanded 34.2% year-on-year to 153 in 2019, revealed a Knight Frank report.
“An uncertain external environment and contraction of the manufacturing sector affected the financial cash flows of end-users. Investors also faced greater difficulty in leasing out the units,” said the property consultancy.
It noted that only seven industrial property listings under mortgagee sale were freehold in tenure, with a floor area below 5,000 sq ft.
Majority of the leasehold industrial properties under mortgagee sale listing, on the other hand, have a floor area of less than 10,000 sq ft. In fact, only ten listings are bigger than 10,000 sq ft.
Knight Frank observed that bigger industrial properties listed under mortgagee sale “tend to have shorter leases and are more suitable for end-users”.
The number of retail listings under mortgagee sale, on the other hand, more than doubled in 2019 to 103 as slower sales exacerbated the challenges faced by retailers.
According to Singapore’s Department of Statistics, the retail sales index dropped for the ninth straight month in October 2019.
All the retail properties placed under mortgagee sale were smaller than 1,000 sq ft in floor area, with opening prices pegged at less than $1.8 million.
“The owners of these properties probably purchased these units around the peak of the market cycle,” said Knight Frank.
“However, the retail rental market has softened since end 2014 with rental index now 16.6% below the peak. This placed further stress on distressed owners who needed to service expensive mortgages.”
Meanwhile, the number of retail and industrial property listings placed under owner sales fell from 60 and 114 in the second half of 2018 to 40 and 43 in the second half of 2019, respectively.
Knight Frank noted that some of the retail and industrial listings “became mortgagee sales as owners were unable to sell the property before foreclosure”.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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