And so to the final sales of what has been an extraordinary year for the auction market.
Both of the main commercial auction houses, Allsop and Acuitus, ended the year on a high, with total sales from their December sales achieving £70.8m and matching near enough the same figures achieved at the end of 2019 of £70.7m.
But this is the year that online auctions were forced onto all the auction houses as a result of Covid-19 from March onwards, when they either adopted the change or failed to take advantage of the continued demand in the market.
Allsop fared rather better in December this year with total sales from 57 properties of £61.2m, having withdrawn 28 lots prior from its original catalogue of 99 properties.
This compared favourably with its sale held in December 2019, when it raised £48.6m from the sale of 77 properties.
The firm was certainly ambitious in taking on 25 lots with a lot size of over £1m, of which it withdrew seven prior but sold 15 out of the 18 eventually offered.
The largest lot (lot 14) was guided at £8m-plus and was sold prior. It was a substantial retail parade investment on the corner of Victoria Road and Park Way in Ruislip, Middlesex, comprising 14 shops and 18 self-contained flats producing a total income of £479,424 pa. And, at the guide, would have shown a gross yield of 5.9%.
There were three other properties that were guided over £3m, which all sold prior: lot 15 in Bromley which was guided at £3.75-£4m; lot 30 in Thurloe Street, South Kensington, SW7, which was guided at £3.5m-plus; and lot 37 in Northgate Street, Chester, which was guided at £4-£4.5m. At the top end of the guides, these would have shown gross yields of 10.33%, 3.16% and 10.25% respectively.
The biggest lot to sell under the virtual hammer was a freehold public house investment in Strand on the Green in Chiswick, W4, facing the River Thames. Let to Brunning and Price and trading as The Steam Packet, it was let until 2031 at a current rent of £129,600 pa and was guided at £1.5m-plus. It sold after intense bidding for £2.86m, a gross return of 4.53%.
A further lot to sell well was another freehold public house investment in Station Road, Upminster, Essex (lot 4). Let to the Spirit Pub Company Ltd until 2072 at a current rent of £82,000 pa, it was guided at £1.45m-£1.5m and sold for £1.8m, a gross yield of 4.55%.
Yields hold firm
It just goes to show that for the right investment with secure income, yields have very much held up to pre-Covid levels, especially when investors are faced with paltry returns if funds are left on deposit.
In the recent auction review, one investor stated that yields have softened to 8%-plus for properties that were once in the 4-5% ranges, which might be true for over-rented properties, or ones with a few years unexpired at rents that just look too high at £100,000-plus. But I believe that yields have pretty much held firm where properties are let at below or around £50,000 pa, if let to quality covenants and ones that are currently honouring their commitment to pay their rents.
Allsop’s commercial auctions for the year have raised £388.4m from the sale of 544 properties, compared with £433m last year from 648.
Acuitus was the next to follow with its sale on 10 December. It offered 20 properties from an original catalogue of 29, but withdrew nine beforehand. Seven were sold beforehand which left 14 on the day, of which nine were sold. Total sums realised were £9.6m which was in marked contrast to the sale back in December last year, when the firm realised just over £22m from the sale of 33 properties.
At this year’s sale, the catalogue had seven properties with a price tag of more than £1m, of which two were withdrawn prior, one was sold prior, one sold in the virtual room and three remain unsold.
The one that sold at auction on the day was the largest lot, the Travelodge Hotel in Beswick Drive, Crewe (lot 11). Let to Travelodge Hotels until 2030 at a rent of £218,610 pa, it was guided at £2.2m-£2.3m and sold for £2.25m, a gross return of 9.71%.
A freehold retail investment in Cardiff Road, Caerphilly, also sold well (lot 2). Let to William Morrison Supermarkets and occupied by Specsavers on a lease until 2064 at a rental of £43,150 pa, it was guided at £750,000. It sold for £770,000, a gross yield of 5.6%.
Acuitus’s total for the year is £111m from the sale of 158 properties, which compares with the £178m raised last year from the sale of 223 properties.
Misgivings changed
There is no doubt that the last 12 months have been challenging for all the auctioneers having to adapt to an online platform to service their clients and buyers alike. But they have all embraced it with enthusiasm and shown remarkable success in adapting it to their needs.
I, for one, have always been sceptical of online auctions, as you lose all the atmosphere of a live ballroom sale. But Covid-19 has changed any misgivings one might have had, and they have really come into their own.
They will no doubt continue from the next round of sales in February and I suspect that once vaccines have been distributed, the market will return to a mix of live and online sales, providing much needed flexibility to the whole market.
John Townsend is head of auction advisory service at Harold Benjamin Solicitors
