The weeks following the Brexit vote on 23 June have seen economic and political chaos, unleashing a wave of uncertainty and further unsettling investor confidence.
The private treaty residential and commercial property markets had reached complete stagnation before the referendum, so all eyes were anxiously fixed on the first two commercial auctions afterwards as being perhaps the best barometer of the state of health of the property market.
They needn’t have worried. It was business as usual with both Allsop (on 6 July) and Acuitus (the next day), realising a total of £118.2m from the sale of 196 lots, out of a total of 243 offered, for an overall success rate of 81% on the day.
Business was brisk, with private investors clamouring for the relative safety of bricks and mortar in comparison with the continued volatility of the equities market.
The first lot to be offered after the Brexit vote was by Allsop and was bought by Kishor Ruparelia, a well-known private investor, to celebrate his birthday the following day.
The lot – 296 Neasden Lane, NW10 – was offered on behalf of receivers at KPMG and was a freehold retail and residential investment let to an individual until 2024.
It produces an income of £18,000 pa but had a rent review due this year; also included in the overriding lease was a three-room maisonette. Guided at £300,000 to £325,000, it sold for £362,500, a gross yield of 4.9%.
Between both auction houses, a total of 63 receiverships were offered, with CBRE once again the principal receivers, offering 34. Of these, Allsop sold all 10 of theirs for £7.9m and Acuitus sold all bar one of their 24 in the room for £13m. These included a portfolio of 15 Yorkshire banks, of which 13 sold in the room for £7.1m, with another one selling beforehand.
A lot that I particularly liked and thought was a good buy was lot nine in Kendal, Cumbria. Situated in a prominent position on the corner of Stricklandgate and Finkle Street. It was let to Clydesdale Bank (trading as Yorkshire Bank) until 2026 at a rent of £46,750 pa, but with breaks in 2019 and 2021. It sold for £580,000, or a gross yield of 8.06%.
Another one to catch my eye was the first in the afternoon session at Allsop, lot 88, which was again offered by CBRE’s receivers. The property, 233/233A High Road, Loughton, was a freehold retail and residential investment let to Nero Holdings until 2026 without a break, at a rent of £58,700 pa. It was guided at £950,000 and sold for £1,050,000, a gross yield of 5.5%.
A total of 25 properties sold in the room with a lot size in excess of £1m, with three at over £2m and one at more than £3m.
The biggest in the Allsop sale was lot 92 in Edgware Road/Frampton Street, W2, which was a long leasehold (98 years unexpired) retail and residential investment. Comprising three shops and nine flats (three of which had been sold on long leases) and producing £107,800 pa, it sold for £2.4m, a gross yield of 4.4%.
Acuitus’s biggest lot was the Aldi supermarket in Entwistle Road, Rochdale. Let to Aldi until 2030, with a break option in 2025, it produces an income of £222,281 pa with fixed uplifts in 2020 to £256,015 pa and to £289,656 pa in 2025. It sold for £3.7m – an initial gross yield of 6% but rising to 6.9% in 2020 and 7.8% in 2025.
With sterling rates at their lowest level for nearly 31 years, UK property has become far more attractive to overseas investors with an already built-in discount.
But there was plenty of evidence in the Allsop and Acuitus sales that regular and new UK investors are as keen as ever to invest – and UK auction rooms probably provide the most accessible way to achieve this.
The first two major residential auction sales take place later this month (Allsop on 20 July and Savills on 25 July). All focus will now be directed towards the residential auction market to see how it has fared – or, as I suspect, to confirm once again that normal service has resumed.
John Townsend is a consultant at Harold Benjamin Solicitors
