No crisis here, say auctioneers
One economic crisis after another has found its way into the property market, with a slump in prices and demand. However, the muchvaunted DIY recession is so far having no effect on investment property, as demonstrated by recent auction successes.
The latest Acuitus auction raised £55.7 million, as investors targeted a wide range of commercial property. A total of 73 lots sold (83 per cent of those offered) with 20 achieving more than £1 million.
Richard Auterac, Acuitus auctioneer, says: “In this time of economic uncertainty, the auction room enables investors to access the type of income returns which are not available through other investment media... The mood of investors in the room was as upbeat as it was at our May auction.”
The highest price achieved at the sale was for an Aldi supermarket investment in Rochdale. Let until 2030 at a current rent of £226,281, it sold for £3.7 million (yield, 5.7 per cent).
Buyers were also in the market for properties with asset-management or development opportunities. A vacant freehold office with residential redevelopment potential, near London’s Tower Bridge, sold for £1.35 million, 60 per cent above guide price.
Mr Auterac says: “Confronted by negative returns from government bonds and continued volatility in the equities market, both private investors and entrepreneurial property companies are continuing to target commercial property. There was no apparent difference in pricing between our pre- and post-Brexit auctions.”
Allsop’s July commercial auction showed strong investor appetite for commercial property. The auction raised £62.5 million on 124 lots, with an 82 per cent success rate. George Walker, partner and auctioneer, says: “investors remain undeterred in direct commercial property investment, despite Brexit uncertainties”.
Even in June, with the prospect of the referendum, bidders’ enthusiasm was undampened — Andrews’ and Robertson’s commercial and residential property auction raised nearly £11 million from 71 lots.
The largest lot sold under the ham- Star lots: Aldi for Acuitus; Finchley flat for Andrews and Robertson mer was a freehold three-bedroom, two-reception end-of-terrace house in Balham, south London. It was the first time the property had come on to the market in 47 years and it presented a development opportunity. Competitive bidding took the lot well above its £750,000 guide, selling for £940,000.
Other highlights included a spacious, long-leasehold two-bedroom flat in Finchley, north London, in the same ownership for 17 years, which sold for £450,000.
A post-referendum survey by Acuitus, which canvassed 50 UK clearing banks, international banks, development lenders and providers of shortterm finance, indicated little or no change to lending terms.
Mr Auterac says: “With regard to the commercial property investment market, the message from the UK clearing banks and specialist lenders is that they are open for business as usual.
“The prudent level of debt finance available to investors was clearly an important factor in the strong level of buyer demand at this auction. There is a long way to go with the negotiation of the UK’s exit from the EU but this sale demonstrated that, despite the headlines around large open-ended investment funds, there is strong investor demand for direct ownership.”