Auctions predictions for 2016

In 2016, I foresee continued demand, fuelled by the speed and certainty of the auction arena and the sheer spread of available opportunities, which are so hard to come by via private treaty. There will, I am sure, be more portfolio break-ups and more disposals by the funds and other corporates, which can see how efficient the whole process is, and I suspect the internet will have more of a role to play in the coming year. As always, securing stock will be the main challenge for all auctioneers: with such low returns available to investors in other markets, the reason to sell has to be very compelling. But I can see the year ahead will no doubt continue in the same vein as the previous year ended. The final 2015 sales figures of the UK’s two principal commercial auction houses show that they ended the year on fine form. Allsop realised £59.7m from its December sale of 106 properties with an 85% success rate, whereas Acuitus brought in £43m from 57 properties and achieved an 87% success rate. Both sold 10 lots under the hammer of which each had a lot value in excess of £1m. But it was the debut of two young auctioneers, one on each team, that made them truly notable. Will Clough offered the last seven lots of Allsop’s December auction, selling all bar one, for a combined total of £1m (86%). I speak from the heart when I say that he will forever remember his first lot, which was a freehold parade of shops in Chester-le-Street, County Durham, let at £47,500 pa and sold for £600,000, a 7.4% yield. At Acuitus, investment director Jo Seth-Smith, a winner of the RICS Young Auctioneer of the Year award many years ago, finally stepped out of the shadows and into centre stage, making her one of less than a handful of female property auctioneers in the country to do so. She offered four lots for a combined total of £1.3m and sold all of them. Her first lot was a part-vacant freehold retail investment in Wells, Somerset, let at £23,920 pa, which sold for £421,000, a yield of 5.4%. It is great to see fresh blood taking the rostrum. It bodes well for the future of the industry. It’s even better to see more women there, for it has been a male bastion for years and can only benefit from this move. A few Estates Gazette auction columns back, I noticed a competitive auctioneer, who had entered the arena five to seven years ago, referring to the older members of the fraternity (some of whom have been in the field for more than 40 years) as old gunslingers who needed to move over and make room for the young. I understand the need to evolve and it is right that we hand over our gavels to the next generation, but I was dismayed that the experience that comes with age should be so devalued – there is room for us all. However, I do none the less sincerely hope that this fresh young talent continues to be given further opportunities to grow. On a less combative note, one property of note from Allsop’s December sale included an old friend in White Kennet Street, E1, which we sold at Cushman & Wakefield back in December 2008. Let to Post Office Counters until 2021 at a rent of £125,000 pa with a review in 2018, this time round it sold for £1.9m (or 6.3% net). Lot 16 was a freehold and part-long leasehold office building comprising 14,105 sq ft in New Malden, Surrey. Let to Lyons Davidson for 12 months from completion at a net rent of £190,739 pa with potential for conversion to residential, it sold for the highest price of the day at £3.4m or £239 per sq ft, a yield of 5.3%. At Acuitus, another old friend that we previously offered at CBRE, in Southend-on-Sea, Essex, is let to Holland & Barrett until 2022 at £95,000 pa, sold for £1.2m (a yield of 7.73%). Meanwhile a freehold retail parade in Kirkgate, Bradford, West Yorkshire, demonstrated how the more risky investments with short-term leases can produce a more generous initial return with everything to play for. It was let to tenants including Poundworld, JD Sports and Thomas Cook with reversions from 2017 at a total current income of £347,500 pa. It sold for £1.5m, or a return of nearly 22%. John Townsend is a consultant at Harold Benjamin