The latest cPad Market Flash shows that the total value of properties traded in this year’s February and March commercial property auctions was up 62% in comparison with the corresponding sales in 2013.
A total of more than £187m of assets sold in February and March at a sale rate of 84% which was up on the 79% rate achieved a year ago. The average price paid for lots has also risen year-on-year from £550,000 to £700,000.
Acuitus auctioneer, Richard Auterac, comments: “The rising average lot size is attributable to two factors. The first is the gradual recovery in prices through hardening yields and falling voids. These trends are largely confined to the better quality end of the investment risk spectrum. The second factor is the marked improvement in investor confidence.
“This has led to a substantial increase in investment funds available, both onshore and offshore, and an increased willingness for property companies to move up the risk curve and tackle more complex asset management situations including refurbishment and development.”
Retail remains the dominant property sector accounting for 56% of the properties sold but the proportion of offices continues at a historically high level.
Richard Auterac comments: “The £50m+ of office asset buying in the February and March auctions represented 27% of the properties sold. It illustrates interest from property companies on the back of
both improved occupier demand at today’s rental levels and also the potential for residential conversion”.
In the February and March auctions, the office sector achieved the highest average sale price of just under £1.4m.
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.
After several years of disappointing results, the UK’s economy recovered strongly in 2013, and at the beginning of 2014, the Economic Scorecard increased to 7. This is the highest score that has been achieved in the indicator’s history and is further testament to the increase in sentiment across the economy.
Phil Tily, IPD’s Executive Director & Head of UK and Ireland, comments: “There is little doubt that the UK economic recovery is gathering at a pace which has exceeded all expectations. Much of the pick-up has been primarily driven by increases in consumer confidence and retailer confidence associated with higher house prices and a reduction in household savings.
“As the year progresses, recovery should broaden out to the wider economy, with stronger business investment and rising export demand having a larger impact on growth figures.”
The latest cPad Market Flash can be downloaded in the Market intelligence section here
