Commercial auctions in the North West have shown a strong start to the year, with the total raised in the first quarter up by 33% on the same period last year to £37m.
The success rate for commercial stock was also up slightly to 77%, according to figures from Essential Information Group.
Paul Thompson, managing director at Pugh & Co, which holds auctions in Manchester and Leeds, said the strong performance was underpinned by the revival of the economy in the North.
The number of lots offered and sold dipped slightly, indicating that larger commercial lot sizes are coming through the North West auction rooms.
“The North is a vibrant region, and there is a lot of commercial activity up here. Also, the property prices are lower here, and we are seeing investment coming in from different regions. Over the past 12 months we have seen really strong demand,” he said.
Highlights of Pugh’s February sale in Manchester included a Ministry of Justice office in the city centre sold for £3m against a guide of £1.25m. The sale price reflects a yield of around 3% but with the lease due to expire in three years, the site, close to Manchester Piccadilly Railway Station, could soon be redeveloped.
A second MoJ lot, a 5,000 sq ft office block four miles from Manchester city centre, was sold with vacant possession for £400,000, doubling its guide price.
The North West’s strong commercial performance contrasts with a 12% year-on-year drop in the commercial total for the UK overall, down to £313m for the quarter.
North East results, Jan ‘17-Mar ‘17 (Jan ‘16-Mar ‘16)
| Item | Total | Residential | Commercial | |||
|---|---|---|---|---|---|---|
| Lots offered | 690 (757) | ▼ 8.9% | 639 (701) | ▼ 8.8% | 51 (56) | ▼ 8.9% |
| Lots sold | 534 (539) | ▼ 0.9% | 496 (502) | ▼ 1.2% | 38 (37) | 2.7% |
| Percent sold | 77.4% (71.2%) | 8.7% | 77.6% (71.6%) | 8.4% | 74.5% (66.1%) | 12.7% |
| Total raised | £42m (£45m) | ▼ 7.7% | £33m (£35m) | ▼ 5.1% | £8m (£10m) | ▼ 16.9% |
North West results, Jan ‘17-Mar ‘17 (Jan ‘16-Mar ‘16)
| Item | Total | Residential | Commercial | |||
|---|---|---|---|---|---|---|
| Lots offered | 1,118 (1,342) | ▼ 16.7% | 922 (1,137) | ▼ 18.9% | 196 (205) | ▼ 4.4% |
| Lots sold | 836 (970) | ▼ 13.8% | 685 (814) | ▼ 15.8% | 151 (156) | ▼ 3.2% |
| Percent sold | 74.8% (72.3%) | 3.5% | 74.3% (71.6%) | 3.8% | 77% (76.1%) | 1.2% |
| Total raised | £91m (£94m) | ▼ 2.3% | £55m (£66m) | ▼ 17.2% | £37m (£28m) | 32.9% |
Residential sales fared less well for the region, however, dropping by 17.2% to £55m. This compares with a 9.9% drop for the UK as a whole, down to £713m for the quarter.
In the North East, the picture was reversed, with residential putting in a stronger quarterly performance than commercial.
The commercial total raised fell by 17% to £8m, while residential saw a 5% drop to £33m. The 3% stamp duty surcharge on second homes is less of a determining factor here than elsewhere in the UK because house prices are lower.
Jamie Cooke, managing director of IAM Sold, which holds auctions in the North and Midlands, said: “The past few months have been strong in the North East residential auction market. We’ve had a higher turnout at events, and a wide range of stock that has attracted both owner-occupiers and investors.
“We’ve seen more investors back in the market, and a return to ‘buying blind’, which we didn’t see so much when the market was tougher.”
Cooke added: “Although we are seeing higher-value properties [£200,000-plus] attracting strong interest, we recently auctioned a property with a starting bid of £1. It prompted a staggering 92 viewings and sold for £63,000,” he said.
The property, sold this month, is a two bedroom end-of-terrace house in Sacriston, County Durham.
IAMSOLD’s previous Great North Property Auction, in March, achieved a 96% success rate with all lots sold on a conditional basis. The sale raised £4.2m from 48 lots sold. One of the larger lots was a detached four-bedroom home in Thornaby, Stockton-on-Tees, Cleveland, which sold for £202,000 from a starting bid of £165,000.
Philip Waterfield, auctions director at London-based Strettons, said the way of buying adopted by some Northern auction houses was more akin to private treaty, and was more suitable for owner-occupiers.
North West’s economy grows
The most recent regional economic growth statistics, published by the government in December, show that the North West saw the UK’s highest annual growth in economic output (measured using gross value added) in 2015: up by 3.6%, compared with the UK figure of 2.9%. The lowest rate of growth was seen in the East Midlands at 1.8%.
The North West saw the fastest growth in GVA per head (3%), followed by the North East and Wales (both 2.8%).
David Callaghan
