In the most important auction this decade, Allsop’s September sale defied expectations of gloom last Thursday and provided a significant boost for the beleaguered UK property market.

Yields were higher than at Allsop’s July auction, but the success rate was a healthy 80%.

And with the private treaty side of property having ground to a halt, the sale gives a good indication as to what buyers are willing to pay for commercial property.

Allsop sold 131 of the 165 properties offered.

The sale raised £74.3m, with an average lot size of £565,000.

Marked decrease
This represents a marked decrease from the equivalent auction of 2006, when the company sold 90% of the 267 properties offered, raising £182.2m. However, the success rate increased from the 78% achieved in the July sale.

The total raised represented an average yield of 5.75%, an outward movement from the 5.4% achieved in July this year.

And the Benchmark yield on properties let to strong covenants, such as banks or high street chemists also performed strongly, achieving an average yield of around 5%.

With the auction coming the day before Investment Property Databank figures showed the all-property index total return figures falling 1.2% in September, the sale could be seen as good news for the industry, providing transactional evidence that prices are set to soften rather than plummet.

I think the result should give a significant amount of confidence to the market

Duncan Moir, auctioneer at Allsop

‘I think the result should give a significant amount of confidence to the market,’ Duncan Moir, auctioneer at Allsop, said.

‘The atmosphere in the room was a lot more vibrant than it was in July.

Sensibly priced
'There is a diminution in the amount of stock coming to the market, and this was a small auction for us, but that was because we decided not to take on properties that we did not think were sensibly priced.

‘Values have eased, and the market is not as frothy, but people don’t have to sell. We are not seeing any forced sales.’

He said this was a softening of about 10 basis points, which he described as negligiable.

Moir said that the liquidity crisis had not hit the auction room too hard, but that it would limit the amount of new buyers looking to get into the market. ‘A lot of the buyers for investments such as the banks don’t tend to borrow, so they have not been affected,’ he said, ‘and a lot of people already have lending agreements in place. But I think it will be difficult for people to arrange new facilities.’