Property auction sector affected by negative sentiment

The economic situation in the Euro Zone and the US has weakened investor sentiment in the property auction market, according to a recent report by Jones Lang LaSalle (JLL).

The property consultancy firm revealed that auction transaction volumes fell in Q3 2011 to the same low in Q1 2009.

It noted that only seven transactions took place in Q3, the lowest number since Q1 2009, when only 11 properties were sold.

“While the seasonal slowdown due to the Hungry Ghost Festival could have had some impact, it is likely that investors are adopting a wait and see approach amidst the uncertain global economic climate,” said the report.

The report added that the atmosphere is similar to 2008, when sub-prime mortgages initiated the financial crisis.

“As such, we can expect transactions to remain muted as investors grapple to make sense of the current economic climate.”

JLL observed that investors are turning to other sectors, after cooling measures restricted residential purchases.

Overall, residential transactions have been on the decline, while the commercial sector is emerging as an investment alternative, JLL said.

The firm expects to witness an increase in the number of willing property sellers. Even as the market remains conservative, buyers will still come forward as the trend of low interest rates continue, said the report.

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