Commercial Auction Summer Review 2018
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What happened in 2018 so far and auction results

As long as property is correctly priced it will sell. Never has this been truer over the last decade as it is today.

We are pleased to report our sales have been very resilient for the first 7 months of the year despite falling numbers of lots coming to the wider auction market, and the consequent reduction in sales figures.

So far this year we have sold 529 properties (562 in 2017) realising a total of £321.4m (£357.76m in 2017), whilst success rates have been maintained at in excess of 84%.

In the retail and leisure sectors the year did not start well with Administrators appointed at Toys ‘R’ Us, Maplin and East followed more latterly by Poundworld. These high profile failures did not deter the investor and our February sale now totals £72.1m, the second best February total for a decade, with a respectable success rate of 86%. It was £66.7m (80%) on the day.

Later that month on the 24th, the “Beast from the East” swept across the UK lasting nearly ten days and paralysing much of the country. Prezzo announces a CVA and a number of branch closures. Little surprise, our March sale saw a reduced total realisation, with total sales now amounting to £72.2m. The success rate of 86%, in line with our half year average. £59.2m (74%) on the day.

April saw the introduction of the new MEES regulations and the first ever Allsop Online Commercial Auction. Our inaugural sale was somewhat modest in size with only 8 lots offered. 7 of the lots sold, endorsing our decision to explore the “online” market.

On the 17th April sterling closed at a post Brexit high of $1.43. In early May the anticipated rise in interest rates failed to materialise leaving us all wondering when the change was going to occur. The FTSE index which started the year at 7648, fell to below 7000 in March, bounced back to an all-time high on the 21st May at 7859. Further bad news however emerged from the retail sector with House of Fraser applying for a CVA.

The ongoing benign interest rate environment continued to support the market and provided us and our clients with an 87% success rate for our May Sale the highest of the year so far. The sales total now standing at £89m, was down on the previous year.

In June the world went football crazy with the start of the World Cup and a heat wave started to build.

The beginning of July sees UK inflation remaining at 2.4% whilst sterling hits a low for 2018 of $1.30. On the world stage President Trump is making ever more threatening remarks on the USA’s trade imbalance with the rest of the world and the prospect of a trade war looms larger.

July 3rd sees our last sale before the summer recess with more caution entering the market. Unsurprisingly the success rate was slightly less than anticipated at 80% but the sales total, with sales after auction, is now only slightly down on the previous year at £87.6m (£92.8m in 2017.)

As expected we round off the first half of the year with slightly smaller sales totals compared to last year. There is little doubt the market has been cooling slightly for the more secondary investments, with the average yield for B grade stock having moved out from 8% for last year to 8.5% for the current half year. Perhaps more surprisingly, for the best quality lots, average yields have hardened from an annual rate of 5.77% to a half year figure of 5.65%.

Notwithstanding this hardening, the average hides a wide range of yields achieved with some of the very best lots achieving yields down to 3.5%. These most sought after lots are mainly located in London and the South East, though not exclusively. As you continue to read the contents of this review you will see from our market research that there is still a very active market with many investors wishing to purchase over the rest of the year and beyond. As we stated at the beginning, despite a cooling market “if property is correctly priced it will sell”.

Tables showing Half year auction results
Figures for 2014-2018 current totals (£) and success rates (%)