cPad July 2013

28th June 2013

The latest Acuitus/IPD cPad Commercial Property Auction Market Flash (cPad) shows that during the round of commercial property auctions in May, activity continued to rise with total sales in the room reaching more than £80m – a rise of 30% year-on-year.

Of the 148 properties that sold, a higher than usual proportion (74%) were retail assets.

Acuitus auctioneer, Richard Auterac, comments: “There has been further evidence of a more fully functioning market where the expectations of buyers and sellers are being met. This is in contrast to the 2008-2012 period when values were trying to catch up with the worsening economic circumstances and prices were falling.

“With increasing evidence on a daily basis that the economic corner has been turned investors are now taking a more entrepreneurial approach to assets and backing their ability to make them perform.”

cPad shows that the Average Yield of properties sold during May was 9.5% which was 40 basis points (bp) sharper than the previous round of auctions in February/March.

Auterac observes: “The past year has demonstrated that it would be wrong to read too much into this fluctuation, but there is now a growing consensus in the market that prices are firming up”.

The market flash also puts the auction market in the context of the wider economic environment and focuses on retail property which remains the predominant type of stock that flows through the auction room.

IPD’s Head of Research, Greg Mansell, comments: “In April 2013, national retail values fell by a further 0.1% according to the IPD UK Monthly Property Index. These declines were not evenly spread by geography or type. London continued to outperform strongly while shopping centres posted their strongest total return performance in almost two years, despite continued capital value falls.

“This two-speed location-based performance is likely to continue through 2013, as confidence remains weak outside of London’s prime markets, and retailers stay cautious.”

Richard Auterac comments: “Many secondary properties outside London now have re-based values, which in many cases can be around 75% less than their peak. This has enabled the large pool of private equity to stretch further without the need for debt. Indeed a number of property companies are now impatient to invest their equity into asset management situations at today’s prices.

“Demand is exceeding supply for what are perceived to be the best opportunities.”

The latest cPad can be downloaded here