Bidders invest energy at auction

By Charlie Jacoby, June 11, 2009

Secondary retail properties producing high-income streams sparked competitive bidding at Andrews & Robertson’s residential and commercial property auction, as enthusiastic buyers chased keenly priced stock in London and the South East.

Prices at London’s New Connaught Room sale on June 4 averaged 20 per cent above guides, raising totals of £17 million, as 70 per cent of 107 lots found buyers, against £7 million and 65 per cent in April.
Star performer at the event was lot 39, an unbroken parade of four shops, eight flats and a D1 unit close to Clapham Common with a variety of commercial covenant strengths including Sainsbury’s. The mixed-use multi-let building, guided between £3.75 million and £4 million, produced £286,410 a year and sold under the hammer for £4.35 million and a yield of 6.2 per cent, making it the third largest lot to sell through auction this year.

Robin Cripp, chief executive and senior auctioneer, says this confirmed that investors still had an appetite for correctly-priced larger lots, though funding was still an issue for some.

Mr Cripp says: “We were delighted with the result. It demonstrates categorically to vendors that we are as capable as some of the larger auction houses of selling big-ticket items.

“Only three firms (including Andrews & Robertson) have sold properties within this price range so far this year and not many lots have sold for in excess of £4 million in this recession, so this was a brilliant outcome for our client. It also shows that Andrews & Robertson has the skill to present multi-million-pound buildings to the market and sell them well.”

A second, unbroken parade of single-storey shops in Streatham High Road, south west London, producing £109,000 pa with potential for development and guided at £950,000, made £1.105 million and a 10 per cent yield.

Investor enthusiasm for residential stock from local authority and housing association vendors also sparked competitive bidding, producing some extremely strong prices for the London Boroughs of Southwark, Lambeth and Richmond upon Thames, as well as Grainger plc, Peabody and the Wandle Housing Association.

Average yields on assured shorthold tenancies peaked at nine per cent; regulated tenancies yielded an average 3.3 per cent and secondary retail returns averaged at eight per cent.

The opening lots offered for Wandle Housing Association, vacant terraced properties split into self-contained flats in Battersea, got the auction off to a spirited start, with prices exceeding guides by 21 per cent and 41 per cent, achieving £522,500 and £565,000 respectively.
Mr Cripp says: “The third lot of the day in Penge made 55 per cent above its guide of £140,000, selling for £217,000 for the same vendor. Investors are looking for something they feel is safe and there are people around who definitely feel that now is the time to buy.”
With demand for land dependent upon its location, a small site in Herne Hill, south east London fuelled strong bidding from small property developers, making 77 per cent above its guide of £135,000, to sell for £240,000 for the London borough of Lambeth.

Mr Cripp says: “A lot of small developers we have spoken to have sorted out their funding problems and now want to get back into the market. Lots of them are looking to buy development sites now, sort out the planning and have them ready for sale in 2010.
“Even the UK Monopoly champion, an experienced chartered surveyor, was buying and selling in our room.”

The Andrews & Robertson sale follows Strettons’ May auction, which was similarly successful. It sold some £9.44 million-worth of property at an 82 per cent success rate. Best of the lots was a dairy in Walthamstow, north east London, which pays a rent of £17,407 a year. It sold for £500,000, against a guide price of £250,000 to £270,000.

That’s a yield of less than 3.6 per cent — the kind of yield you might expect in any self-respecting property boom for a property like that.
Ground rents were especially popular at Strettons’ sale, with most producing double their reserve price. A parade of five shops and eight flats in NW2, producing £1,120, went for £64,000. Meanwhile, a block of four flats in Harrow, Middx, producing £200 a year, went for £15,000 against a guide price of £7,500.

It was, however,a thin catalogue. At Strettons, Philip Waterfield comments: “I am now hoping that those owners who have been reluctant to sell might now take heed and come back into the market.”

Last updated: 5:36pm, June 11 2009