Brexit voters leave the saleroomunshaken
HA R D T O b e l i e v e three months have passed since the UK electorate voted to leave the European Union, a result that confounded expectations. It has been a tumultuous period, both in the markets and politically but I believe we are getting greater clarity about the outlook for UK commercial property with every passing week.
According to Essential Information Group, the volume of commercial property sold by auction in the past 12 months to July 2016 has increased by 7.8 per cent from the previous year, to £1.39 million. The results at LSH Auctions have mirrored this trend, with a 2.3 per cent increase in our ballroom sales during the same period, from £57,236,390 to £58,528,800 and a further £4,228,750 being sold using our new online platform, increasing our total sales for the period by 9.6 per cent.
The auction rooms are a barometer of the market on any particular day, so the July 2016 results were an important gauge.
Our ballroom sale just a week after the vote saw 87 per cent of all properties being sold and a few days later our online sale took place, with 100 per cent of the assets selling.
The largest lot, a redevelopment opportunity in St Leonards-on-Sea, was sold for £1,750,000 using our “buy it now” function — demonstrating continued confidence in more complicated, higher-value development opportunities in the regions.
Often a sleepy month, August was busier than usual this year, with investors trawling to buy stock and trying to eke out deals while others were away. The negative press during the build-up to the referendum vote has now almost disappeared and, in many ways, the commercial auction market has sprung back to life. Indeed, having just completed our most recent catalogue, we are pleased that supportive regular corporate and property company sellers are featuring prominently in the book.
There is the usual mix of property from around the UK to suit a variety of investors, from secondary investments across most asset classes, surplus land, ground rent investments and even a fort in the Solent requiring refurbishment and suitable for alternative use. Importantly, and as always, we have been realistic with our pricing to ensure our committed sellers and buyers know the properties are in the market to be sold.
The private investor remains entrepreneurial and robust and, given the continuing lack of investment opportunity and stability in many other asset classes and the confidence and positive pricing movement in the regions, we expect the amount of stock to increase and results to remain stable throughout the rest of the year.
With high levels of hard-earned cash in the bank returning little, as rates are likely to remain low, this lack of opportunity will encourage more buyers to the market. This may encourage sellers to look again at their portfolio to see if they have any surplus or under-performing assets needing to be sold. Certainly, local government, utility companies, receivers and private equity firms will all be encouraged by this market sentiment and are likely to be highprofile sellers — especially local governments, as they are under constant pressure to review their portfolios.
The resilience of our market is comforting. Auctioneers are always keen to justify their market against our private treaty competitors and, since the emergence of more online auctions like those already successfully held, it will be exciting to see how our market continues to develop.
Lambert Smith Hampton is a rarity, being a traditional commercial auction house offering an online-only alternative. As an auctioneer, I love the energy of the ballroom but, if we are to compete, we must continue to develop our services to provide Oliver Childs is national head of auctions for Lambert Smith Hampton