Auction house, Allsop, has recorded another strong year for its commercial auctions with total realisation of £609m during 2017 and a success rate of 86%.
Despite the year being marred by ongoing political upheaval in the wake of the General Election and economic uncertainty on the back of Brexit negotiations, Allsop recorded results largely unchanged from 2016’s bumper year.
Allsop ran their regular calendar of six auctions in 2017 with a total of 921 lots sold. Significantly, 180 of these were sold for more than £1m, a notable increase up from 171 in 2016. October’s auction, which was held three weeks after speculation that interest rates would rise imminently, achieved a record £ £162m, Allsop’s largest sale since the boom years of the noughties. It was this auction that Allsop also recorded the sale of the largest lot of the year, a Marks and Spencer unit in Bishop Stortford, £7.27m (5.1%).
The report draws on the long running Buyers Survey, which shows strong continued demand for high value lots; 30% of investors in 2017 were looking to invest £1m+ whilst lots at £500,000+ are likely to see the greatest demand in 2018.Buyer analysis from 2017 also revealed a significant rise in overseas buyers in the room – with 13% of purchasers coming from outside of the UK, attributed to the devaluation of Sterling last year.
Retail investments remained popular with the sector showing a 35% increase in the value sold from 2015, up to £420 million. The volume of retail lots also increased on the previous year, up to 77% from 74% of lots in 2016, whilst the average retail lot size grew by 5% to £594,000.
The office sector saw a 35% increase in value from £38m to £51.5m of sales, with the average lot size in 2017 increasing by 20% since 2016 to £1.1m.
Supply in the South East remained tight with vendors holding on to assets despite high demand. Totals raised in the South East totalled £274m in 2017 (45% of the total value), a similar level to 2016. In the regions, there was increased demand in the West Midlands, North East, and East Midlands with combined sales rising to £168m, representing 28% of total UK sales, compared to 23% in 2016.
Market confidence remained strong with 82% of investors intending to buy more property over the next 12 months – marginally higher than 2016 at 78%. Notably, this increases to 96% over the next five years, up from 93% in 2016.
Patrick Kerr, Partner at Allsop, said: “As anticipated, 2017 proved to be much like 2016’s record year, with the market holding up despite ongoing political uncertainty. Due to the low returns available elsewhere, investors largely remained undeterred and we saw real appetite for the best quality lots in good locations.
Forecasting an outcome for 2018 is more challenging. The sector may face interest rate rises, the implementation of Minimum Energy Efficiency Standards (MEES) and suffer if the Brexit trade negotiations collapse. As it stands, market confidence remains high and it seems likely that investors will continue to look favourably on the real estate sector this year.”