Auction success rate dips back to 73% but £83m still raised
Allsop’s March auction was hit by the gloom which again hangs over the property sector, as its success rate dropped back to levels seen at the beginning of the credit crunch.
The sale, held by the UK’s largest commercial property auction house last Wednesday, achieved a 73% success rate and raised £83m. The company posted a similar result last July, at the beginning of the downturn in the property market.
In subsequent sales between September and February, success rates had risen back towards the historic average of 80%-plus, although totals raised were low because the company chose to sell only higher-quality properties.
But the March sale came in the week that Bear Stearns teetered on the brink of collapse, and was held on the day HBOS lost 20% of its value amid rumours that it was facing liquidity problems.
‘The timing was very unlucky,’ said Duncan Moir, auctioneer at Allsop.
‘I don’t think there could have been a more difficult week to hold an auction. It is one of the first times we’ve ever had a success rate below 80%, and I think that reflects the sector in general.
‘But that said, there are two strong things you can take from it; £80m of liquidity was raised in the market, and the bigger lots were still selling; and the people whose business is property are still in the market, because there were a lot of regulars in the room.’
Moir said that the drop in success rates was partly caused by a large number of pubs in the catalogue, which were offered with vacant possession, and which failed to find buyers.
‘I think it was a combination of pricing and sentiment,’ Moir said. ‘The pub sector has its problems at the moment and it is difficult stock to put into the market.
‘You put properties into the catalogue because you think that they are going to find buyers; all auctioneers want business in the catalogue. But it is very nuanced on whether we have it in.
‘I think the pricing was realistic and, given the circumstances of the previous week, it was a good sale,’ Moir added.