On Tuesday 17th July 2012 PropVestment attended the 60th Barnett Ross Auction in London, to find that the UK property market shows mixed feelings, with development projects selling very well.
Most of the properties and lots in this auction were of a commercial or development projects nature.With only 2 of the 69 lots as pure residential. It can be seen as a successful auction on the day with 70% lots sold on or prior, however this is comparatively less to the 92% success to their last auction in May.
One of our clients showed interest in a standard commercial and another lot with development potential. We were able to get the commercial lot at a very reasonable price, resulting in a rental yield of 9.6%. The winning bid was over guide but the returns and limited risk meant this was a very good deal for our client. We was expecting more competition however as the lot was just outside the hot market that is London there was less interest from inexperienced investors that have a premium and preference for London only property.
For the other lot that was a risky and uncertain proposition for future development. We advised our client of the potential returns once site was cleared and planning obtained. A strategy was put in place to bid up to 150% of the guide. Unfortunately the lot sold at over 400% guide.
Lot 3: Reserve Below £150k, Sold at £700k – Total derelict shop unit with potential for 3 story development in Kings Cross.
Lot 61: Reserve Below £175k, Sold at £257k, Vacant office and first floor flat in NW2, potential for 2x one bedroom flats.
Lot 25 – Sold £215k, Rental £29k – 13.5% yield. – 2 shops in Cheshire.
Sellers Keeping Reserves too high?
Over 22 lots where the reserve was not met, a fair few where the difference was only a few thousand, possibly 1% of the asking price. Some will have sold after but this shows why the market is so slow, sellers holding out at higher prices and buyers and demanding higher yields and so will not pay too high a price.
info based on observation from the Barnett Ross Auction, data correct as to what was observed.
House Prices: Rising or Falling?