Increased sales volumes and a narrowing yied gap between prime and secondary assets are among the key findings of an analysis of the December 2013 auction sales.
The latest Acuitus/IPD cPad Commercial Property Auction Market Flash shows that there was a 78% increase in total sales volume for auctions in December in comparison to the corresponding period in 2012.
A total of £122.6m of commercial property assets sold at the major December auctions with an average lot size of just over £600,000.
Retail assets once again dominated the sale room and represented 75% of the properties sold. However, the office sector again put in a good performance; accounting for 16% of all lots sold, with an average lot size of over £1m.
The research also charts a slight narrowing in the yield gap between prime and secondary property sold during December. With the prime yield at 6.6% and the secondary yield at 10.4%, the yield gap of 380 basis points was below the 2013 trend of c.450 basis points.
Acuitus auctioneer, Richard Auterac, comments: “We might be seeing the first signs of the prime and secondary yield gap contracting for the first time since 2008.
“For the property-savvy investor or property company, the glass has changed since the summer from half empty to half full. Vacant space, short leases, capital expenditure and failing tenants are no longer viewed automatically as the huge threats that they have been since 2008.
“Commercial property is once again making a case for its place in a balanced portfolio of assets. Investors are seeing value in the auction room while experienced property operators can see new asset management potential in what were previously distressed assets.”
cPad is a joint initiative between Acuitus and IPD and utilises auction sales data from EIG to provide a unique perspective on the commercial property market for investors. It creates a valuable snapshot of today’s market and draws on economic analysis by IPD to set the market in a broader context.
The research also features the IPD ‘Economic Scorecard’ which monitors the economic health of consumers and retailers.
Phil Tily, IPD’s Executive Director & Head of UK and Ireland, comments: “The economic score card continued to perform well with the average score remaining steady at 6.5 in Q3 2013, but rose again in November to 6.7. Future growth expectations for the economy continue to remain positive with pick-up in consumer and business confidence”.
