Commercial Auction Annual Review 2016
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Buyer analysis

Our regular buyers’ survey, conducted at the point of exchange within the auction room, provides us with valuable knowledge of purchasers’ intentions and sentiment for the year ahead. We ask a number of questions relating to buyers’ intentions, geographical locations and whether finance or cash will be used to fund transactions. The results as ever give an interesting insight into the private investors’ market.

Have you bought a property at auction before?

The number of regular buyers in the auction room has increased to 84% (74% in 2015), the highest level of returning buyers recorded since the inception of the survey in 2012. This trend is likely to be attributed to the appeal of buyers to the broad availability and regularity of stock available in the auction room while they are struggling to find a good selection of stock on a regular basis at the right price within the private treaty market.

Do you intend to buy another commercial property at auction in the next 12 months?

The sentiment of buyers over the next 12 months remains strong, with 78% of investors stating their intention to buy another commercial property at auction during this period (81% in 2015). It is hardly surprising that the percentage of investors wanting to buy commercial properties in the short term remains high as low interest rates continue to make property an attractive form of investment.

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

Our buyers have again expressed their willingness to look further afield for investments, with 58% of buyers purchasing outside of their home region (61% in 2015), representing the 2nd highest figure since our records began. This trend is likely to continue as investors look towards the regions in search of value and increased returns.

With the commercial auction market being predominantly a domestic market, the overseas investment slowdown reported by some market commentators elsewhere has had a limited impact on the buyers in the auction room this year.

How much to you intend to invest in any one property?

Similarly to 2015, buyers have indicated a broad and even spread of interest in their target lot sizes. 30% of buyers intend to invest in each of the £250,000 – £500,000, £500,000 – £1m and £1m+ price bands with a slight decrease in appetite for the £0 – £250,000 band (10% 2016, 12% 2015).

With so many large lots offered this year (170 lots over £1m), it is encouraging that demand is unchanged since last year, with 30% of all buyers looking for £1m+ lot sizes.

Do you intend to use finance?

There is an increase in the number of buyers intending to rely on cash to fund their purchase (70% in 2016, 69% in 2015). This figure, last seen in 2012, is an indication, as mentioned elsewhere, that investors are being presented with limited options for returns on their savings and are continuing to invest in real assets for higher returns. This continuing reliance by buyers on cash is probably compounded by the continuing tough lending environment where banks are being as selective as ever in determining which properties to lend on.