Charlie Jacoby assesses the advantages and disadvantages of selling a property at auction outside London.
London agents emphasise what they see as the limited appeal of provincial auctions. “Those auctions tend to offer vacant properties because they are aimed at local owner-occupiers,” says Allsop’s Patrick Kerr. “The investment market centres on London.”
Erdman Lewis held an unsuccessful provincial auction in Scotland in 1985, and recently came close to holding a sale in the regions when it was instructed to dispose of 36 properties all over the country for British Gas. But it finally decided on London. “The consensus is – if it is worth selling, it is worth selling in London,” says Erdman Lewis’ John Townsend. “The alternative would have been to have had sales in Birmingham, Manchester or Leeds, and Scotland.”
But Scotland has a very different auction culture. According to Grimley J R Eve’s David Graham, punters in Scotland regard auctions as a medium of last resort. The residential market is especially poor, because buyers believe that auction property is substandard.
A London venue, however, does not always produce the best deal. Duncan Vincent, a Reading auctioneer, once had a shopkeeper client who offered a residential agent £36,000 for a repossessed maisonette above his outlet in a private treaty sale. This was turned down by the agent and the maisonette was subsequently sold at auction in London. The buyer arrived outside his new property, having bought it sight unseen, and had to ask in the client’s shop where it was. It turned out that the buyer paid £17,000 for it in London. He later resold it locally for £36,000. “All auctioneers should keep their properties to within 20 miles of their auctions,” says Vincent.
Hair & Son holds auctions in Southend with a strong residential slant. It auctioned 13 lots in September, and hopes to complete on 10 of these. Hair’s Colin Beaumont reports demand for residential investments. “Building societies put repossessions in their London auctions. But we would get better results,” he claims.
Compared with the provinces, however, London is awash with money. Like any large financial centre, both the best and the worst deals are available in equal quantities. Jones Lang Wootton’s Richard Auterac calls London “the first port of call for overseas money”. “If you had a lot as prime as a Boots investment in Outer Mongolia, you would still get the best price in London.”
Nevertheless, London auction houses are increasingly interested in the regions’ potential. Allsop has had two residential sales in Birmingham this year. The firm’s Gary Murphy reports that both were 93% successful, thanks mainly to the number of people travelling up from London to come to it. He claims that this is the first time in recent years that a major London auction house has taken its show on the road. But Kerr continues: “I cannot envisage our commercial side having a provincial sale. I can’t see the demand for investments outside London. We tackle the provinces in London by offering proxy bids and telephone sales.”
Ward & Partners is the Sevenoaks-based auction arm of Arun Estates. In October it sold 67% of 75 properties, making £1.4m. Ward’s David Harvey supports Kerr’s claim about commercial property in the provinces. Harvey found commercial buildings comparatively more difficult to move than residential which, he says, is going well at a low level. And residential as a whole has slowed down a little since August because of apprehension about the Budget.
Birmingham-based Bigwood has averaged between 85% and 90% on most of its Midlands sales this year, which are mixed commercial and residential with a bias towards residential investments. But Bigwood’s Grant Dixon predicts a trend that could discourage agents from expanding their auction departments into the regions. “I anticipate that my market – under the hammer – may disappear as general market conditions improve,” he says. “Properties will go back to private treaty sales.”
In the past year, Conrad Ritblat Sinclair Goldsmith has sold more than 250 properties for 24 local authorities around the country. But, even though they are provincial lots, CRSG’s Simon Riggall is adamant that he will auction them only in London. “We have had two auctions in Scotland and, without doubt, they were less successful than the same properties would have been in London,” he says.
Tracey Hancock, who opened Weatherall Green & Smith’s Leeds auction department this year, disagrees strongly with Riggall. WGS took a strong interest in some of the northern lots in CRSG’s catalogue at its London auction and discovered that the majority of buyers were local.
But Riggall points out that you cannot guarantee that the buyers will be local. “Auctions rely on competition. The more people you get competing, the higher the price will go.”
Both WGS and Dunlop Heywood started holding Leeds and Manchester auctions this year. WGS held commercial auctions in Leeds and Manchester in November. In Leeds, 11 lots were offered, two sold prior, four sold on the day, and negotiations are under way on another three. The Manchester sale had 40 lots in the catalogue following withdrawals. Of these, two sold before, 17 went on the day, and there are a further four sales in hand. “The fact that the auctions have been held in Leeds and Manchester have not deterred London-based investors from travelling to purchase properties which are realistically priced,” says Hancock.
Dunlop Heywood held a sale in Manchester immediately after WGS’ auction. It offered 33 lots on the day, having sold six prior and withdrawn one. Only eight sold in the room, realising £560,000, but Dunlop Heywood’s Gareth Kreike hopes to achieve 60% in the end. “There is competition in Manchester, but it is bargain-basement competition,” he says. “Anything that is part vacant doesn’t sell at all.”
Not surprisingly, neither Weatherall nor Dunlop Heywood have performed as successfully as existing agents, who are finding the bulk of their market in residential. Philip Davies & Son made £1.3m on 80 properties at its November auction, which was 67% of the catalogue. It has two major clients in Manchester city council and Salford city council. And out of 22 residential lots in Longden & Cook Commercial’s November auction, seven sold prior, five in the room and six subsequent, which totals 83%. “We’re living off houses,” says L&C’s Howard Gooddie.
Hartnell Taylor Cook in Bristol and Nelson Bakewell in London have solved the great province/London divide by linking up. They hold the branded and heavily marketed Bristol Auction. In return, HTC helps Nelson Bakewell with its similarly styled London Auction.
At the Bristol Auction, all but four of 31 lots sold. They were located as far away as Oxford, Southampton and North Wales, but were broadly West Country. Several investments went under the hammer, including the 6,437-sq ft Honiton Gateway supermarket, which sold for the top price of £350,000. Other prices went as low as £50,000. “The investments would have done well in London, but because they were West Country properties, West Country investors wanted them,” says HTC’s Ian Lambert.
Following recent satellite sales with US centres, Murphy predicts a time when television link-ups will bring London auctions to the provinces, “but it is important to preserve the excitement of the room”, he maintains.
London and the regions will continue to be wary of each other, rather than clash head on. “We need each other to survive. I wouldn’t dream of castigating any regional auctioneer,”says Auterac. “JLW would do a regional auction like a shot if the client wanted it, and if we felt that that is where we would get the best prices. But I think there are plenty of opportunities in London.”
However, some agents are quite confident that London will not produce the goods. Philip Bowe of Bowes Incorporated Valuers is planning a commercial auction for Newcastle. He claims that it will be Newcastle’s first. He hopes to offer up to 20 lots in late January. “The punters here would prefer to spend an afternoon in Newcastle than go to London for the day on the off chance,” he says.
Cliff Krieger of Chesterton in London is forced to agree with Bowe. Chesterton started holding auctions a year ago, having taken over De Groot Collis. Krieger has had a small auction in Barnstaple, Devon, with nine lots, but prefers to stay in London. “We would be delighted to expand,” he says, mentioning Newcastle as a possibility. “The prospects are untold, but at the moment we have no auctions planned for the regions.”
