October Commercial Property Auction Market Update

The Market Is Back …. And Busy

September tends to be a busy time in commercial auctions. This is partly due to routine buying and selling, but also as buyers and sellers play catch up after several weeks without any sales being scheduled. This September proved to be no exception to the rule, with lots of activity in the market.

The Allsop commercial sale raised £46.7m with the sale of 75 lots and a success rate of 75%. While properties came from all commercial sectors just over half of them were retail. Highlights of the sale included an industrial estate with 13 units in Nottingham let at £342,440 pa and sold for £4.63m. A freehold shop/office in Kensington Church Street, London, sold for £3m. At The Killingworth Centre, Newcastle, a pub investment with RPI-linked rent increases sold for £2.17m.

George Walker, partner and commercial auctioneer at Allsop, comments: “Despite some uncertainty in the market, particularly among high net worth individuals – the traditional auction buyers – who seem likely to be impacted by the government’s ‘broad shoulders’ policy in the Chancellor’s first budget, investor interest has remained robust.

“The competition for top-tier properties is strong, signalling a clear shift toward high quality assets. Demand at this level runs deep, and we remain optimistic about a strong final quarter to close out the year.”

The Acuitus sale raised £28m with a success rate of 75%. Seven development opportunities in London proved to be highlights with competitive bidding. A property on Kilburn High Road comprising a ground floor shop and two flats, currently vacant, sold for £1.4m. Another property on South Ealing Road sold for £767,000, well above the guide price.

The auctioneers say that, thanks to ‘strong occupier demand’ and ‘low intrinsic physical obsolescence’, institutional grade industrial investments continue to attract strong demand. For example in Southam, Warwickshire a freehold industrial asset let at circa £180,000 in rent was sold for £2.525m (6.74% yield).

Perhaps illustrating strong buyer interest was that a number of lots sold in advance of the sale. These included the largest lot, Mytchetts Place in Camberley, which sold prior ‘comfortably above’ its guide price of £3-£3.5m.

Richard Auterac of Acuitus says: “Quality investments will always attract interest but we are seeing lot more appetite for development situations. We have already commented that this may be one of the signals of the start of a new property cycle driven by lower finance costs and resumed economic growth. However it is imperative for auction professionals to know their market and to offer clients sound due diligence and pricing advice  – this drives both transactions and satisfaction of what the dynamic auction market can provide.”

The Bond Wolfe mixed sale In September achieved total sales of £31.6m. The company say this was the largest sale outside London and the largest total sales revenue in their history. It featured their largest number of £1m-plus properties sold in a single event.

Notable commercial lots included including a former methodist church in Kings Heath, Birmingham, which had a guide price of £345,000+ but was sold for more than three times that at £1.1m. Several lots were sold prior to auction at amounts that were above guide prices. These included eight freehold mixed use investment properties in Wolverhampton guided at £1.45m+ and a former social club in Smethwick which had a £900,000+ guide price.

Gurpreet Bassi, chief executive at Bond Wolfe, said: “We’re absolutely thrilled by the record breaking success of this auction. Not only was it the largest property auction ever held outside of London, but the demand and competitive bidding reflect a strong and growing appetite for properties across the UK. This is a clear indication that the property market remains buoyant, and the economy is continuing its recovery.”

As we mentioned last month, what might be announced in the Budget at the end of October is likely to be having some impact on buying and selling at the moment. Whether buyers and sellers were jumping into the market now or holding back because of that is difficult to say. However, there was certainly plenty of business being done.