The Acuitus October auction saw what is believed to be the highest price achieved in the UK by a commercial property lot selling to an internet bidder.
The auction raised £67.6m with a success rate of 89% and included the £1.725m sale of a freehold retail warehouse investment to an investor who won the bidding online. The 13,750-sq ft Countrywide Farmers store in Newport is let until 2022 at a current rent of £156,400pax.
Acuitus auctioneer, Richard Auterac, commented: “This was a landmark for us and the sector. Investors can watch our auctions live online and also bid securely in a safe and professional environment. We think that an increasing number – and especially those from overseas – will start using this method.
“Having sold more than £6bn of assets during my career in the auction room this is admittedly a small additional step today but potentially a giant leap forward in opening up private equity to direct investment in commercial property.
“The sale of this lot illustrated the different channels we provide for bidders. Not only did we have the successful online buyer, there were also bidders in the room and on the telephone competing for it.”
The auction also represented the largest catalogue that Acuitus has brought to market and saw a total of 26 of the 75 lots sold achieve prices of more than £1m.
The first lot offered – a long leasehold retail investment in London’s Kensington – sent the tone for the auction. The 205-sq ft shop at 101 Walton Street SW3 attracted sustained bidding and eventually sold for £850,000 at a yield of 3.45%. It is let to the Chelsea Antique Rug Gallery until 2019 at a current rent of £31,000pax.
Another London lot – a freehold retail and residential investment at 7 Elgin Crescent W11 – was also the object of competitive bidding and sold for £1.45m at a yield of 3.9%. Let on a new 10-year lease with break to Save the Children, it currently produces income of £60,500pax.
Properties with scope for possible residential conversion or other alternative uses also attracted strong interest. A freehold office and retail investment with residential development potential in Bournemouth sold for £1.36m. The 16,199 sq ft Denham House produces current income of £63,000pa and there is consent to convert the building’s upper floors to homes.
Richard Auterac comments: “The Permitted Development Rights regime is encouraging many experienced property investors to explore the opportunities provided by this right to convert which the Government announced recently”.
Investors also targeted opportunities outside London: all 15 of the Scottish investments found buyers while the highest price achieved in the room was £2.37m for a 46,381-sq ft retail parade in Pontypool, Wales. Let to tenants including Peacocks, Argos and Iceland, the parade produces current income of £288,000pax.
Leisure and restaurant investments were again popular with a 35,420 sq ft Gala Bingo Hall investment offered for sale by M&G Real Estate selling for £1.52m at a yield of 4.7%.
Richard Auterac comments: “Auctions have been characterised as a high yielding investment environment but the sharpening yields now being achieved in the sale room are notable.
“However, investors who are confronted by the minimal – and sometimes volatile – returns currently available in the equities and gilts markets are being attracted by the comparatively high returns that property offers but which for many high net-worth investors are simply not accessible through traditional property agency channels.
“The attraction of commercial property investment we believe will continue for some time. It will create a very favourable market for sellers and strong competition in the room from a broadening base of investors using our highly experienced and professional multi-channel market place.”
Other sales in the auction included:
The sixth Acuitus auction of 2015 will take place on December 10th at the Radisson Blu Portman Hotel, Portman Square, London W1.
