Amid a backdrop of European and global political chaos, it was business as usual at the two main commercial auction houses’ latest sales.
An early Easter break put pressure on both Allsop and Acuitus to compile catalogues at accelerated speed. Fresh from their respective successes in February, the seasoned teams raised a combined total of £151m after 195 lots traded hands, compared with £127.5m in February from the sale of 187 lots.
At £97.7m, it was Allsop’s biggest March sale since 2007, highlighting the enormous pent-up demand from investors who, it might appear, are shying away from residential buy-to-let investments following their recent hammering in the Budget and earlier decisions to raise stamp duty from 1 April.
It will be worthwhile observing what happens in the commercial market this year as a consequence of this decision, seen by many as catastrophic to buy-to-let residential investors whose business models rest on low interest rates and borrowing. Perhaps the tide will be diverted going forward, bringing a flow of new bidders towards commercial property investment.
Both sales included receiverships, with 33 on offer at Allsop and 22 at Acuitus. My old firm CBRE offered 12 at Acuitus, raising £12m, with 13 at Allsop raising £7.2m, which included lots 14 through to 22, an unbroken freehold parade of retail and residential investments in Whitton, west London. The parade included two vacant flats producing £305,830 pa. It was offered as nine separate lots and sold collectively for £6.1m (a yield of circa 4.75%), clearly demonstrating that auction is the better way to dispose of these larger London parades.
Each auction house offered separate long-dated investments which, unsurprisingly, sold well. Allsop offered a ground lease investment in Gosport, Hampshire, let to Asda with 84 years unexpired at a rent of £249,850 pa. It was guided at £5.3m-plus and was sold prior – presumably at a price well in excess of this – but at the guide, it would have shown a return of 4.5%.
Acuitus offered a freehold retail investment in London Road, Southampton, also Hampshire, which was let to Co-Operative Group until 2076 at a rent of £58,000 with a rent review in March this year. It sold for £1.3m off a guide of £950,000, a net yield of 4.3%.
The first lot in the Allsop sale was located in one of my favourite towns in the country, Street, in Somerset. Let to Barclays until 2022 at a rent of £19,600 pa, it was guided at £300,000-£325,000 and sold for £300,000, a yield of circa 6.25% – a very nice little investment for someone.
And the first lot in the afternoon was also a great lot: 118 High Street, Putney, SW15, a freehold retail investment with vacant residential upper parts comprising a five-room maisonette. The ground floor and basement are let to Monsoon Accessorize until 2025, but with a tenant break in 2020, at a rent of £66,000 pa. It was guided at £1.5m plus but, after intense bidding, it sold for £2.1m (a net yield of 2.9% just on the shop income). Lady Luck had clearly been shining on the vendor, who I spoke to immediately after the sale, as he had only just secured possession of the flat for no consideration.
Finally, there was a very nice gesture made by Neil MacKilligin at the Allsop sale following the sale of the next lot in the afternoon, 171 Lavender Hill, Battersea, SW11. This was MacKilligin’s final auction before stepping down to become a consultant and he made a promise to one of the regular investors that if he bought the freehold of this investment, he would personally step down from the rostrum and take the place of the runners to get him to sign the preliminary papers. Sure enough, it got knocked down at £1.9m to this gentleman and true to his word MacKilligin did as he had promised. A very nice touch to end his final auction.
Both sales showed that there is huge demand still chasing the better-quality investments and that auctions are undoubtedly the best way for vendors to secure the best price for their assets.
There are no signs this demand is diminishing and it just remains for the auction houses to continue to attract the better-quality investments into the room with the next round of sales in May.
John Townsend is a consultant at Harold Benjamin Solicitors
