Lots of variety at auction

By Charlie Jacoby, November 3, 2011
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Old Brompton Road investment, sold by Acuitus for £540,000

Old Brompton Road investment, sold by Acuitus for £540,000

You get 57 varieties of lot at auctions these days. Gone are the sales when you would expect to find just the typical auction fare of receivership properties and ground rents.

Acuitus's October auction raised a total of £26 million from 40 properties. Acuitus auctioneer Richard Auterac cites the "extraordinary breadth" of asset type that sold at the firm's latest auction as being indicative of the current nature of the market place.

He says: "The auction house's job in today's market is not just about prime investment-grade assets. This sale demonstrated that vividly - there were prime retail units selling at yields of just over five per cent, but there was also demand for the empty regional office blocks - essentially speculative investments.

"I've never known a market where there is such a range of investment criteria from across our buying clients.

"This presents a huge challenge in bringing properties to the market. Accordingly, we don't see our responsibilities beginning and ending in the auction room. We have to engage intensively with vendors, understand their pricing and be certain about the reasoned advice we give."

Acuitus's fifth auction of the year got off to an emphatic start, with the ground rent investment of a 16,000 sq ft shop in Chesterfield let to Primark selling for £705,000 at a yield of 3.6 per cent. A packed and lively room then snapped up assets including two freehold retail investments in London's Marylebone and Islington at £1.68 million and £1.21 million respectively - both at yields of around five per cent.

Commenting on the overall sale rate of 63 per cent, Mr Auterac says: "This doesn't show a lack of buying power in the market, it just illustrates how specific buyers are being. Where buyers get assets that match their needs, they are very aggressive in their bidding. Just under a quarter of the lots that sold today did so at yields of less than six per cent and post-auction interest already indicates that further sales will complete".

At Andrews and Robertson's latest September auction, revenues rose to £13 million. With uncertainty over the wider economy heightening and volatility in the stock market continuing, bidders looked for stability in bricks and mortar, with many investors chasing good commercial covenants, residential projects in quality locations including those with a London postcode, while other buyers carefully sought out revenue and high-yielding stock, or lots with potential to add value. Almost £12 million was raised on the day and investor demand for stock continued pushing success rates to 60 per cent and receipts to almost £13 million.

Some of the strongest individual results where prices significantly exceeded guides occurred on behalf of motivated sellers: they included receiverships and mortgagee-in-possessions as well as lots offered on behalf of private vendors seeking a swift and secure transaction.

Robin Cripp, senior auctioneer, says: "It is fair to say that buyers are being selective and remain extremely price-sensitive. They are looking for a secure home for their money; often they prefer to buy in an area which they know well, while others are willing to look beyond their region. London and the South-East remains a favourite area for investment; we are also seeing a number of overseas buyers who consider the UK to be a secure base as uncertainty over the Euro-zone continues to grow."

    Last updated: 11:59am, November 3 2011