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Commercial Auction Annual Review 2017
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Buyer analysis

Buyer Analysis

Asked at the point of exchange, our Buyers’ Survey has been running since 2012 and picks up on compelling trends both continuing and new.

The survey reveals the large majority of our buyers are experienced at auctions, are continuing to rely on cash reserves to complete whilst demand for larger lots remains strong. Looking to the year ahead buyers remain keen to purchase in the auction room, with the greatest demand being for the higher value lots (£500,000+).

Have you bought a property at auction before?

Continuing a trend seen since the inception of the survey, the majority of buyers in the room have bought at auction before (85%), affirming auction as a popular way to purchase (84% in 2016, 79% in 2015 and 80% in 2014). Anecdotally many buyers are preferring the auction room having experienced delays and disappointment with traditional private treaty purchases. (Graph a)

How far are you located from the property you have purchased?

2017 has seen a significant rise in ‘overseas’ buyers in the room with 13% of purchasers coming from outside the UK. This contrasts with an average of 4% of ‘overseas’ buyers over the previous 3 years (Graph b). This sharp rise has perhaps been aided by a significant devaluation of Sterling since June 2016, as well as the perceived strength of property ownership in the United Kingdom which contribute to making it an attractive global investment location.

 

How do you intend to fund the purchase?

Cash remains the predominant method of funding purchases in the room with 85% of purchasers stating they require no finance when purchasing. This is a sharp increase on the proceeding years (70% in 2016, 69% in 2015 and 65% in 2014) and perhaps reflects slower lending timescales, leading buyers to seek finance post completion. This survey excludes those seeking finance post completion. (Graph c)

Do you intend to buy another commercial property at auction in the next 12 months (% of 'Yes' responders)

Looking forward to the year ahead, a high proportion of buyers intend to buy a commercial property again at auction over the next 12 months (82% in 2017, 78% in 2016) while 96% of buyers have stated their intention to buy a commercial property again at auction over the next 5 years (93% in 2016). This continued ‘mid-term demand’ we put down to a low interest rate environment, the slow pace of traditional transactions and a good supply of a wide range of properties to the auction room. (Graph d)

How much do you intend to invest in any single property?

Investor demand on a micro scale shows continuing strong demand for larger lot sizes with 30% of buyers looking to invest £1m+ (30% in 2016, 30% in 2015). We have also seen the demand for £250,000 – £500,000 lot sizes over the past 4 years continue to improve, perhaps a reflection of recent pension freedoms allowing buyers to diversify their pension pots, investors coming out of the residential “buy to let” market to diversify into commercial property due to taxation changes, 33% in 2017, 30% in 2016, 29% in 2015 and 23% in 2014 (Graph e).

Allsop £1m+ Lots YTD

This part of the survey is somewhat reflective of the composition of the catalogues released throughout the year. Throughout 2017 we sold 180 properties over £1m, 171 in 2016 (Graph f) and so we would expect for the buyers of these large lots to be seeking similarly priced assets in the future.

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