Commercial sites are big business
INVESTORS ARE clamouring for commercial property. The autumn round of commercial auctions showed strong demand for shops, offices and industrial units producing an income. The October Acuitus auction saw the sale of £67.6 million of assets at a success rate of 89 per cent. Richard Auterac, Acuitus chairman, says:“Auctionshavebeencharacterised as a high-yielding investment environment but the sharpening yields now being achieved in the sale room are notable. Investors who are confronted by the minimal — and sometimes volatile — returns currently available in the equities and gilts markets are being attracted by the comparatively high returns that property offers but which, for many high net-worth investors, are simply not accessible through traditional property agency channels.
“The attraction of commercial property investment will continue for some time. It will create a very favourable market for sellers and strong competition in the room from a broadening base of investors, using our highly experienced and professional multichannel marketplace.”
The auction saw 27 of the 75 lots sold achieve prices of more than £1 million
A Tesco in Streatham, London SW16, was sold by Allsop for £2.09 million, 23 per cent ahead of its guide price and featured what is believed to be the highest price achieved in the UK by a commercial property lot selling to an internet bidder. A 13,750 sq ft Countrywide Farmers store in Newport, let until 2022 at a rent of £156,400 a year, sold after strong competition to an online bidder for £1.725 million. Next Acuitus auction is on December 10.
Allsop held a two-day sale that raised £102 million with a success rate of 83 per cent. This result brings Allsop’s current total for the year to more than £378 million, after five auctions.
Allsop offered 210 investments, with 22 lots selling for more than £1 million. The South East continued to dominate, accounting for 37 per cent of the sum raised, with more than 90 per cent of lots offered in the region sold. Largest lot of the day was a mixed retail and residential building in Wood Green, N22 — the sector and region with strongest demand. It sold for £2.55 million, ahead of its guide by 13 per cent.
A Tesco in Streatham, SW16, bringing in £81,759.32 a year, sold for £2.09 million, a 3.91 per cent initial yield, some 23 per cent ahead of guide. This auction also saw good demand for industrial properties. Competitive bidding was generated by a modern scheme of 24 units in Rugeley, eventually selling for £1.26 million (7.5 per cent net initial yield and showing a capital value of £58 per sq ft), more than £250,000 above guide. Allsop is now taking entries for its December 8 auction.
Lambert Smith Hampton’s next sale is on December 7. Among its October auction highlights, it sold a freehold former banking hall in Reading at more than double the guide price. It also sold a freehold retail investment, let to Pizza Express, for 35 per cent above guide, to a London investor.
In the residential market, Allsop’s latest sale raised £49.4 million. Lots ranged from £900 to £5.8 million. Regulated tenancy investments continued to sell well. A four-room first-floor flat, let at £11,778 pa to a regulated tenant in Maida Vale, W9, went for £1 million.
The established corporate residential investors also competed strongly for assured tenancy investments. A self-contained flat producing £10,920 pa in Purley, Surrey, went for £191,000, reflecting a yield of 5.7 per cent.
Allsop’s Gary Murphy says: “There’s no doubt that the changes to the stamp duty land tax rules have had a cooling effect on the £1 million-plus market, with central and Greater London taking the bigger hits. Despite this, buyers were still chasing good locations where pricing showed value.”