UK budget boosts asset demand at penultimate sale of the year

8th November 2021

The impact of the UK Autumn budget was demonstrated at the Acuitus penultimate commercial property auction of 2021, which raised £16.47m with a success rate of 91%.

Acuitus Chairman, Richard Auterac commented: “The recent budget announcement of business rates relief, both the 50% reduction and the improvement relief, has resulted in positive sentiment from private investors towards retail, leisure and hospitality assets at auction.

“Investors see the improvement relief as a welcome addition which will encourage innovation and the overall enhancement of buildings to green and futureproof them for decades to come, allowing them a means to capitalise on property and lettable values. The 50% rates reduction will act as a stress relief for those occupiers recovering post-lockdown, which investors view as a means to look increasingly at investment into retail, leisure and hospitality sectors.”

The largest lot sold under the hammer was £1.95m at a net initial yield of 4.3% for a Central London public house investment in London’s Aldgate. It produces a current annual rent of £90,000 rising by £15,000 per annum to £165,000 and is let to The Oliver Conquest Public House until 2031 on full repairing and insuring lease. A vacant public house in London’s Stanwell also sold for £805,000, double its guide price.

Richard Auterac added: “The irony of these public houses selling as a radical overhaul of UK alcohol duties are announced is not lost. With this in mind, we can expect to see private investors looking increasingly towards pubs in strong neighbourhood and city locations as a direct impact.”

A freehold town centre retail investment in York sold for £1.42m at a net initial yield of 6.9%. It is let to Lakeland until 2025 and produces a current annual income of £105,000.

Acuitus Director, Charlie Powter commented: “The property sold well above its guide price, demonstrating the demand for retail assets in key locations, where a long-term occupier such as Lakeland who has been in occupation for over 18 years and the rent is priced at today’s values. We see this as a turning point in the attitude of skilled property investors as they adopt a more positive approach to selective high street locations.”

A substantial office investment in Shirley, West Midlands sold for £1.22m at a net initial yield of 6.4%. The 18,648 sq ft building is multi-let and produces a current annual income of £89,167.

Acuitus Director, John Mehtab commented: “In-town offices with residential development potential are of strong interest to investors looking to create live-work hubs for occupiers and developers looking to future redevelopment. Shirley is an attractive Birmingham suburb and is undergoing significant residential rejuvenation.”

In a nod towards investor demand for London assets, a freehold retail parade and residential ground rent investment in Kennington, London, comprising eight retail units, with all the flats above sold off on long leases achieved a price of £1.06m at a net initial yield of 6.7%. It produces annual income of £76,115.

Elsewhere, two freehold retail and residential investments in London’s Shepherds Bush each comprising a single let shop and a pair of two-bedroom flats sold for £1.32m and £690,000 at net initial yields of 6.5% and 6.7% respectively. They produce annual rental incomes of £91,400 and £49,120.

Acuitus Director, David Margolis commented: “London lots, particularly those of retail parades with residential offerings, where development opportunities can be released under effective asset management are proving highly popular to private investors. These are particularly sought-after where the income; both current and perspective, and the location are right.”

The final Acuitus auction of the year will take place on December 13th and will be broadcast via livestream on the Acuitus website with bidding online, by telephone and by proxy. Further details here.