An “exceptional” average success rate of 92% in July reflects continued undersupply, according to the latest Commercial Property Auction Data.
The rate came amid a slight softening of average yields from 8.76% to 8.82%.
This was down to the large number of secondary properties offered, rather than a weakening of prices, according to September’s cPad report, produced by MSCI and Acuitus.
Acuitus chairman and auctioneer Richard Auterac said: “Sellers see that investors are prepared to take more risk for lots that offer active management opportunities and are meeting this demand with secondary properties that fit this profile.”
This was reflected in a 100% sale rate for office properties, many of which were suitable for alternative uses.
The secondary yield moved from 10.04% in May to 10.14% in July. Prime yields were 6.54%, compared with 6.34% in the last round of auctions.
Auterac said: “Buyer interest continues to deepen over a wider range of property sectors and locations as GDP and real incomes rise while the lending market normalises.
“However, there has yet to be downward pressure on yields as investors still attach risk to rental growth, occupier demand and the physical obsolescence of the buildings.”
Only 13% of commercial lots offered in July were in London but, owing to tight supply, 100% of London investments found buyers.
Allsop’s summer review of commercial auctions, published last week, found that a relative shortage of properties in London had boosted the firm’s commercial sales in the Home Counties by 10%.
It was “very clear” that London sellers were adopting a “hold strategy”, the report said.
