Auctioneers are confident that this year will be a broadly positive one for the market, after a dip in performance last year.

Allsop Commercial auction room

Allsop Commercial raised £605m in 2017 - a sign of the sector’s resilience

Many auction houses saw a slight annual fall in both total raised and success rates compared with 2016, which they blamed on ongoing political and economic uncertainty and a stranger-than-average 2016.

However, the market fundamentals remained strong, they said.

Allsop Commercial raised £586m in 2017 compared with £605m the previous year — results that partner George Walker said demonstrated the sector’s resilience.

“At the beginning of last year we thought we should be optimistic and we were largely right,” he said. “I don’t think there will be any price growth in 2018 and the demand is still very solid.”

Like Allsop Commercial, Acuitus saw a drop in revenue last year, raising £300m — £45m less than in 2016. However, Acuitus founder, Richard Auterac said that demand would be buoyed by a shift in the type of stock being offered at auction and that the outlook was good for 2018.

New phase

“We are now entering a new phase of our market,” he said. “The period when the supply of assets into the auction room was dominated by the workout of distressed loan books has reduced substantially and is being replaced by a more sustainable investment market.”

His view was echoed by Oliver Childs, head of auctions at Lambert Smith Hampton (LSH), who said that “the time for distressed stock at auction is over”. LSH was one of the only major auction houses to beat its 2016 sales total, and Childs said he expected further growth in 2018.

The general fall in income at commercial auction houses was mirrored in the residential sector. Allsop Residential raised £423m, reflecting a 79% success rate in 2017 compared with £432m and a 78% success rate in 2016.

The savvy bidders in our auction rooms see this climate as one of emerging buying opportunities

Gary Murphy, Allsop

Gary Murphy, Allsop Residential partner, said that while stamp duty hikes, tighter buy-to-let lending criteria and the Brexit vote had caused “market jitters”, some buyers were taking advantage of this new climate.

“The savvy bidders in our auction rooms – and there are many of them – see this climate as one of emerging buying opportunities. Our challenge as auctioneers continues to be pricing stock to maintain interest,” he said.

“We anticipate that 2018 will continue in a similar vein, with investors seeking value and willing to bid for assets that are realistically priced.”

Increasing buyer base

Despite not reaching the sales highs of 2016, auctioneers said that both the buyer and vendor bases were broadening.

Auterac said that the number of vendors selling through Acuitus had grown by around 20% last year and now included “some major US funds”. This had created “a much more stable base to the supply of assets coming into the room”, he added.

This could also be assisted by the continuing rise of online auctions. Allsop offered properties for sale online for the second time in December, following the launch of its platform in 2016 – although the results of the auction have not yet been announced.

Acuitus auction

The number of vendors selling through Acuitus grew by around 20% last year

Traditional auctioneers said they expected their use of online marketing tools and bidding processes to increase.

“The ability to connect with the expanding constituency of buyers in the room and through digital communication will be of paramount importance in the auction process,” said Auterac.

“Accordingly, Acuitus continues to invest in new online marketing channels and digital functionality that meets the needs of our current and future investors.”

While sales may not reach the heady heights of 2016, it seems that there is plenty to be positive about in the auction room in the year ahead.