Going, going, not gone … auctions thrive in virtual mode despite virus
High-end investors are buying everything from wine farms to vintage cars, land and distressed homes, despite being in the midst of a global pandemic.
As SA went into a hard lockdown at the end of March 2020, auctioneers, estate agencies, art dealers and others had to find innovative ways to do business or risk losing their livelihoods.
The lockdown created chaos for auction houses as the typical bidding process fell away due to social-distancing requirements, which ruled out local and international buyers due to travel restrictions. Auctioneers feared that many bidders would lose interest in buying assets, given that they might struggle in the economic fallout of the pandemic and not have the funds for investment.
They turned to live, online methods and, in one case, an SA auctioneer became the first in the industry to set up virtual reality (VR) auctions.
These selling techniques may have started off as temporary innovations but as they have worked so well a number of dealers have decided to make this a more permanent arrangement— or at least part of longterm strategies.
One example is Park Village Auctions, which, this week, auctioned off an industrial and an office property using web simulcast technology. The group says it will use a mix of in-person and simulcast auctions.
It was High Street Auctions that became the first group in the world to operate a VR auction in 2020. It wanted to conduct business with an auctioneer in real time, and bidders could also view the properties with the technology.
Joff van Reenen, director and lead auctioneer at High Street Auctions, says with the new technology the company has conducted more business than it did before the pandemic.
“We had been online with a digital auction app two to three years prior to the lockdown but the pandemic sped up what we do with technology,” he said.
“When we were hit with level 5 lockdown restrictions, we knew we needed an experience to keep our buyers coming back, as well as a world-class platform due to the high-end assets we were auctioning.”
High Street Auctions monitored auctioneers from all over the world and saw they were not using virtual technology.
“Some tried but never managed to perfect it; none used it for real estate but rather for benefit auctions. In a nutshell, we did this all in the first two weeks of lockdown after we realised we weren’t going to be allowed to have live, in-person auctions for the foreseeable future,” Van Reenen said.
VIRTUAL AUCTION
The end result was a huge upgrade to the company’s technology infrastructure, including the purchase of virtual tour software.
“We held the first SA virtual auction out of my garage because we weren’t allowed to go to the office. It was hairraising to say the least, but we did it and it worked,” he said.
The auctions have been diverse and successful for the national auctioneer. A vintage car collection was even auctioned for a farmer in Bloemfontein. At the beginning of December, 140 collector cars were auctioned for more than R22m, with bidders from nine countries and more than 11,000 people watching the live stream.
Other highlights included luxury game lodges and properties in Clifton, one of which was sold for R18m. There have also been bids on industrial facilities and complexes for more than R80m.
Close to R1bn worth of properties was sold by High Street Auctions via VR auctions over the past 12 months. The company has been asked to present a lecture on “virtual real estate auctions” at the 72nd National Auctioneers Association conference in the US in July.
Meanwhile, SA’s largest estate agency, Pam Golding Properties (PGP), implemented an online platform called BidX1 SA before Covid-19. Bidders compete in online rooms and watch prices move in real time.
MC du Toit, CEO of sales at BidX1 SA, says in 2020 the number of bidders on the platform increased 250%. PGP sold properties worth more than R300m in 2020.
“We have been auctioning everything from table-grape farms to wine farms, to luxury houses, office blocks and land in townships,” Du Toit said, adding that PGP is likely to focus on online auctions in future.
“It makes more commercial sense. We are increasing our buyers’ market. People can bid from anywhere using a phone or laptop. In fact, as much as 40% of our bids are via phones. We are also getting higher prices.”
Du Toit said there were bids to the value of about R100m during October 2020 alone. These included a Franschhoek wine farm, which saw fierce competition attracting 77 bids and ended with a final bid of R25m.
Retailers are also finding ways of selling goods online and creating better experiences for their customers.
Hyprop Investments, the listed landlord that owns Rosebank Mall, Canal Walk and Hyde Park Corner, has started using click-and-collect technology.
“We now have Pargo at our centres. Customers can buy products online they may not have been able to buy in a shop in the mall. They then collect the products and buy other things from stores in our centres, so in that way we increase the shopping basket on offer,” CEO Morné Wilken said in an interview with Business Day.
This week, JSE-listed Polish landlord EPP announced it is using a live-stream selling platform to enhance its shoppers’ experience. The platform uses live video to showcase products and sell to customers who join the event remotely.
“EPP has embraced this virtual approach to connect to today’s stay-at-home consumers with the physical shopping offered by its mall tenants in response to the evolving retail landscape and shopping habits affected by the pandemic,” the group said.