Christmas definitely came early for the two main commercial auctioneers, Allsop and Acuitus, when between them they raised a total of £64.3m from the sale of 100 lots out of 122 offered – showing a very respectable 82% success rate.
What was remarkable was that both sales took place just a few days prior to the General Election, when investors’ nerves should have been more on edge than they clearly were.
While the uncertainty that has beset the market for the last couple of years persists, investors continue to chase the better quality stock for better returns than available elsewhere, and especially where there are opportunities for some active estate management to enhance the overall investment.
Both sales saw the regular investors back in the room, but added to by a large number of fresh faces in both packed salerooms.
Allsop
The first on the rostrum was Allsop, which sold 70 properties out of 84 offered for a total of just over £43m and a success rate of 84%. The sale was Allsop’s smallest catalogue since February 2015, however, when it raised £37.6m from 78 lots sold.
This only goes to underline the nervousness of vendors in committing to sell just a few days before the General Election. But looking at the result in the room, some sellers clearly missed an opportunity to take advantage of the pent-up demand which has shown no signs of diminishing.
Nineteen lots were offered at the outset with a price tag in excess of £1m, but with three withdrawn prior and three sold prior, a further nine sold under the hammer with one selling after the sale.
The largest lot of the day to sell was Lot 14, in Pitsea, Essex. Understood to have been in the same ownership since it was first built, the unbroken freehold comprised a parade of 13 shops, offices, four flats, nine garages, two phone masts and car parking.
Producing a current income of £415,717 per annum, the investment offered huge potential for converting the offices to residential and some active management. Guided at a modest £4m plus, four bidders in the room pushed the price to £4.56m, which showed an attractive gross return of 9.1%.
But it was the first two lots that were to set the scene for the day. The first lot was an attractive freehold retail investment in High Street, Chipping Norton, of which the ground floor was let to Caffè Nero at a rent of £50,000 pa until 2025, and with a five-bedroom maisonette on the two floors above being vacant. Guided at £850,000 plus, it sold for £1m or a gross return on just the ground floor of 4.95%.
Lot 2 was a freehold retail and residential investment in Winchmore Hill in North London let to DP Realty Ltd. It was trading as Domino’s on the ground floor, at a rent of £17,500 pa until 2037 but with a tenant’s break option in 2028. The flat above on the first and second floors had been sold off. Guided at £250/£275,000, it sold for £357,500 – a gross return of 4.8%.
But it wasn’t just income-producing investments that fared well. A vacant freehold former pub and residential property in York Street, Twickenham, was keenly contested for. Comprising 2,651 sq ft of accommodation on ground, first, second and third floors, it was guided at £625/£650,000 and sold for £710,000.
And the prize for the most extraordinary result went to Lot 70 in Wrexham, which was being offered by the National Grid. Comprising a freehold industrial investment producing £43,782 pa together with a vacant site of 27.67 acres, it was guided at £350,000 plus and sold for almost £1.2m.
Acuitus
Two days later, it was the turn of Acuitus, the day before the General Election. But interest continued in the same vein, with them selling 30 properties out of the 38 that were offered and a success rate of 79% for a total of £21.2m.
This was again a smaller catalogue than its October auction, when 48 out of 55 lots sold for a total of £40.1m and a success rate of 88%. The catalogue started out with 11 lots with a guide price in excess of £1m, but by the day of the auction two had been withdrawn prior, three had been sold prior, and four sold under the hammer – the biggest of which was Lot 13 in Salisbury. This was a prominent freehold at the junction of Bridge Street and St Thomas Square, and comprised two ground floor restaurants, two ground floor shops and self-contained offices on the first and second floors above. Tenants included Wagamama, which was paying £60,000 pa on a lease to 2033, as well as Done Brothers trading as Betfred. Total income was £224,450 pa and it was guided at £2.2m. It sold for £2.15m, a gross return of 10.41%.
The first two lots also roared off the blocks. Lot 1 was a freehold retail and residential investment in Lavender Hill, Clapham, SW11. The ground floor and basement were let to an individual trading as a café and takeaway restaurant, on a lease expiring in 2034 at a rent of £20,000 pa. The maisonette on the two upper floors has been sold off but with a ground rent of £200 pa. It was guided at £250,000 and sold for £312,000, a gross return of 6.4%.
The second lot was a freehold pharmacy and residential investment in Farnham. The ground and first floor property was let on an over-riding lease to AMG Healthcare, with a guarantee from Ashchem on a new 15-year lease at a rental of £29,300 pa and five-yearly RPI linked rent reviews. It was guided at £400,000 and sold for £535,000 – a gross return of 5.47%.
But I had thought the third lot might have sold better than it did. A heritable retail ground floor retail investment in Gorgie Road, Edinburgh, let to Boots UK on a lease to 2025 at a rent of £16,750 pa was guided and sold at £220,000 – a gross return of 7.6% – a nice buy for the purchaser.
And another nice buy was a freehold bank investment in High Street, Scunthorpe. Let to Barclays Bank plc on a lease to 2026 without break and on a rebased rent of £50,000 pa, it was guided at £550,000 and sold for £548,000 – a gross return of 9.1%.
While these two live auctions went well, the purely online auction offering still hasn’t quite taken over the market as they clearly hoped they might.
BidX1 held its December sale the day after the Allsop sale and sold 20 lots out of the 38 offered, and realised just £3.6m with a 53% success rate. The BidX1 sale this time last year realised £7.2m from the sale of 25 lots with a 63% success rate.
Clearly, real time auctions would seem to be the preferred option for many auction buyers for a whole host of reasons, where bidders still have the option to compete via the telephone and internet. Indeed, Allsop sold Lot 31 for £835,000 in Neath to a telephone bidder on holiday in Antigua at the time.
Now that the election results are known, the uncertainty that has plagued the markets over the last couple of years will be replaced with renewed confidence, and I foresee the two main auctioneers continuing to secure an ever-increasing number of quality instructions for their first auctions of the new year to satisfy the ever-increasing demand from investors.
John Townsend is head of the auction advisory service at Harold Benjamin
