Recent commercial property auctions have highlighted the growing presence of large value lots in the sale room.
The latest cPad sector analysis reports that at auctions in May, although the average price achieved by lots fell slightly in comparison to the previous round of auctions, there was a marked increase in the number and proportion of assets which achieved more than £2m. The number of high value assets in the auction room started to rise in autumn 2016, and in the May auctions a total of 15 lots sold for more than £2m. The trend was repeated at the July auctions.
Acuitus Chairman, Richard Auterac, comments: “Banks and institutional investors are opting for auction room sales to maximise value in the execution of their disposal and restructuring strategies. The higher value stock includes both retail and office assets”.
In terms of the type of property being sold at auction, retail continued to predominate in May with 72% of the lot sales by value bring retail assets.
The sustained demand for London lots was clear with 83% of those offered selling at an average price of £1.14m.
Richard Auterac observes: “The upturn in London asset activity in part reflects a desire by funds to disinvest from smaller assets and also a growing concern about the weakening outlook for prime institutional property in the capital”.
In total, around £145m of commercial real estate assets were sold in the May auctions which was a 6% decrease in volume compared to the same period in 2016. The number of lots sold in the room totalled 256 – an increase of 8% on a year ago.
Reflecting on the overall performance in May, Richard Auterac comments: “ The snap election did little to bolster investor confidence across the market. However, even before the Prime Minister’s election announcement, the market was seeing greater caution. UK investor activity slowed, although overseas investors, benefiting from the weaker pound, took up some of the slack in the prime market”.
cPad is a joint initiative between Acuitus and MSCI, and utilises auction sales data from EIG to provide a unique perspective on the commercial property market for private investors and private property companies.
The latest cPad report can be downloaded here