Commercial property auctions in May saw sales volumes rise 25% in comparison with the corresponding period in 2013 while the average yield achieved by the properties sold sharpened by 90 basis points to 8.3%.
The latest cPad (Commercial Property Auction Data) report from Acuitus and IPD reports that this is the lowest All-Property Yield recorded since May 2012.
Although the total of £99.78m of assets sold in the May auctions showed a year on year increase the sales rate was down to 70% from the 84% that was recorded at the February/March sales
Acuitus auctioneer, Richard Auterac, comments: “This dip in the sales rate is a reflection of some over-optimistic pricing expectations from sellers on certain type of assets.
“The recovery in retail sales is building from a low base and is distributed unevenly both regionally and across the retail hierarchy. Investor demand is similarly focused on the strongest retail locations so it is a mistake to think that because there is improved confidence and performance in some areas then this can be extrapolated to higher prices across the board.”
The leisure sector continued to strengthen in the May round of auctions with its share of sales increasing from 11% in February/March to 13% in May with year-on- year growth of 161%.
Investors continue to be attracted to the long leases and buoyant businesses that the leisure sector offers and it looks to be an asset class which will stay in favour for the foreseeable future.
Looking ahead to the forthcoming round of July auctions, Richard Auterac comments: “Once again, cPad is painting a progressive picture, but it is clear that investors remain discerning and are highly precise in their stock selection and pricing”.
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 the broader context of the wider economic environment, consumer confidence and retailing.
Phil Tily, IPD’s Executive Director & Head of UK and Ireland, comments: “Although there are still challenges ahead for the consumer economy, a real recovery has now begun.
“Consumer confidence has steadily improved over the last six months, with levels now close to those recorded prior to the global financial crisis.
“However, polarisation within the retail sector remains significant with demand in certain regional locations remaining patchy.
“So far in 2014, national values in this sector have gained 1.1% while London standard retail units have gained 5.6%. The two-speed market remains very much in force across the British retail sector.”
The latest cPad Market Flash can be downloaded in the Market intelligence section here
