The Allsop Buyers Survey, asked at the point of exchange since 2012, picks up on trends and sentiment amongst buyers which helps us look forward.
This years survey highlights continued demand for purchasing commercial property at auction, an increase in new buyers entering the commercial auction market as well as an increase in buyers buying close to home. Demand remains high for larger lot sizes (£1,000,000+) and
most buyers prefer to use cash reserves between exchange and completion.
Have you bought a property at auction before?
Although the majority of buyers have purchased at auction before (81%) the number of new buyers to the auction room has increased (19%, 15% in 2017), the highest level of new buyers since 2015. Part of this trend could be attributed to our marketing campaigns which have been targeting new buyers throughout the year. In addition, former buy to let investors continue to maintain an exposure to real estate by buying Commercial lots. (Graph A)
Do you intend to buy another commercial property at auction?
Continuing the trend of recent years, demand from buyers to purchase another commercial property at auction is high (98%, 97% in 2017) despite the wider uncertainty in the market. We believe this high demand is due to limited alternatives for investors to place their resources while interest rates remain low and with stock markets becoming more volatile. (Graph B)
How far are you located from the property you have purchased?
This year has seen an increase in local buyers (44%, 37% in 2017) as well as a continued, reasonable proportion of overseas buyers (8% in 2018 against a 5 year average of 6.6%). This is a reflection of buyers buying close to their homes in locations they are familiar with as well as keeping a close eye on their investment. Whilst our buyers are mainly UK based the continued fall in the value of sterling is giving overseas buyers greater purchasing power for UK property. (Graph C)
How much do you intend to invest in any single property
Demand for larger lot sizes (£1,000,000+) is at its greatest since 2014 (35% in 2018, 5% higher than 2017 at 30%). This is an encouraging sign for the year ahead as well as perhaps reflective of the makeup of the catalogues seen throughout the year. Whilst our buyers quite clearly show a desire to purchase £1m lots the number of such lots coming to Auction has reduced over the 12 months by 42 lots. Quite clearly some unsatisfied demand. Strong demand remains for mid-sized properties (£250,000 – £1,000,000 at 57% in 2018 and 59% in 2017) reinforcing these as liquid lot sizes. (Graph D)
How do you intend to fund the purchase?
Although most buyers rely on cash to fund their purchases (72%) we have seen a notable increase in buyers gearing their purchases between 50% – 75% LTV (15%), the greatest level since the inception of this survey. This is an encouraging sign that funds are being made available by lenders for commercial properties. (Graph E)