Allsop Residential Auction Review 2012

Allsop Residential
Auction Review 2012
2012
allsop residential auction review
introduction
87%
Success rate
1649
Lots sold
£314m
Total raised
About Residential Auctions
Allsop Residential held seven major UK sales throughout 2012
raising nearly £314m. A total of 1649 lots were sold from a total
of 1900 offered representing a success rate of 88%. (The industry
average success rate over the same period was 74%). This is
a 7% improvement on sales revenues in 2011 (£292m) and
confirms Allsop as the leading residential auctioneer in the UK.
In total the firm has raised £651m
by auction over the past 12 months.
Confidence in the UK residential market has centred on London
and the South East. Regional conurbations experiencing lower
unemployment levels and sustained tenant demand have also
drawn interest. But 2012 has seen a continued swing away from
the more fragile locations resulting in lower average lot sizes
in these areas and the consequent need for sensitive pricing.
This report summarises the market patterns which have emerged
from our auction sales in 2012 with reference to ten geographic
regions. We examine lot size, property types and investment yields.
We also look at the global distribution of demand for UK stock.
Despite the difficulties posed by a double dip recession from
the start of the year, the continued drought of mortgage finance
for many first time buyers and the volatility of market confidence
exacerbated by further crises in the Eurozone, our auction
rooms have remained reassuringly active. As always, however,
pricing is key.
2012
allsop residential auction review
analysis
Property
Sellers
Types of property offered in 2012 at Allsop Residential Auctions
Types of sellers represented in 2012 at Allsop Residential Auctions
12%
Mixed Use
11%
Part Vacant
2%
3%
4%
Commercial
48%
Vacant
1%
9%
1%
84%
Residential
41%
Investment
47%
29%
n
n
n
n
n
n
n
n
Distressed
Housing Association
Property Company
Statutory Body
Local Authority
Trustee
Private Sellers
Miscellaneous
8%
Almost half of all residential lots offered by Allsop in 2012
were vacant. Owner occupiers, developers, local builders,
speculators and prospective investors competed in this
sector. Investors were able to fish in a rich pool with over
40% of lots fully let and income producing.
11% of lots were part vacant.
2012 continued to see increasing numbers of
commercial buildings with planning permission, or
potential, for residential conversion or redevelopment.
Weakening tenant demand from businesses has
impacted achievable rents and length of leases.
As investment yields have softened or buildings
remained vacant, commercial owners have been
forced to explore alternative uses and seek different
channels of interest. Paradoxically, vacant office
buildings or redundant industrial units, for example,
have commanded higher values in residential
catalogues.
Allsop continues to represent a broad range of vendor clients.
Once again distressed stock has predominated with almost half (47%) of all lots
being offered on behalf of mortgagees, receivers, administrators and liquidators.
This is a small increase (1.2%) on volumes in 2011. Many borrowers in potential
difficulty with mortgage debt have been spared repossession or forced sale by a
combination of low interest rates and continued forbearance by lenders. Some
are surviving on short term finance arrangements through credit cards or pay
day loans. These circumstances are unsustainable and we foresee further high
volumes of distressed sales this year. 2012 saw over £2bn of domestic mortgage
debt acquired by loan book specialists. As yet, these buyers have not started
to sell assets in the auction rooms. Inevitably, this will happen as impaired
loans are addressed.
The proportion of lots offered by property companies has remained static
(28% in 2011 and 29% in 2012).
2012
allsop residential auction review
analysis
Regions
Average price achieved for vacant single
unit houses and flats in the regions in
2012 at Allsop residential auctions
Regional distribution of property offered in 2012
at Allsop Residential Auctions
7% Yorkshire & The Humber
2% Scotland
4% Wales
2% Northern Ireland
3% North East
12% North West
15%Midlands & East Anglia
18% South East
4% South West
Regions
Average Price
n
n
n
n
n
n
n
n
n
n
North-East
£39,187
North-West
£51,378
South-East
£167,098
South-West
£120,077
Inside M25
£352,809
Midlands & East Anglia
£101,563
Wales
£58,074
Scotland
£55,250
Yorkshire & The Humber
£71,000
Northern Ireland
£46,862
33%Inside M25
The changing average lot size by value offered by Allsop in 2012
across ten geographic regions indicates two significant shifts.
First, there has been a marked increase in the number of higher
value properties (over £1m) to be included in our residential
catalogues. We attribute this to a growing appreciation amongst
sellers of the efficiency and finality of the auction method in a
market affected by uncertainty and last minute renegotiation of
private treaty agreements.
Secondly, we have seen a softening of average lot prices in areas
regarded as economically fragile and improved demand and
values in London and the south east. Within the M25 for example,
they have increased by a fifth.
2012
allsop residential auction review
analysis
Yields
Average Assured Shorthold Tenancies Yields Established in 2011 and 2012 at Allsop Residential Auctions
10
9.64%
9.45%
8.91%
8.44%
7.92%
8
%
8.75%
6
4
2011
2012
2011
2012
2011
n
Overall Average
n
London Only
n
Outside London
2012
The bar chart shows a comparison of 2011 and 2012 average yields for assured shorthold tenancy investments at Allsop auctions.
The data has also been split between London and elsewhere in the UK. Overall yields have moved out by 1% since 2011 suggesting
a greater degree of caution in the investment market. Average yields in London have mirrored this change although the shift has been
less pronounced outside of the capital moving from 8.75% to 9.64%.
analysis
Yields
2012
allsop residential auction review
Average Yields by Property Type in 2011 at Allsop Residential Auctions
Average gross yields established in 2012 at Allsop Residential Auctions
14
12
2011
2012
10
8
%
6
4
n
RgR
n
Assured Shorthold Tenancy
n
Ground Rents
n
Bank of England Base Rate
2
0
15/02/2011 31/03/2011 26/05/2011 14/07/2011 15/09/2011 27/10/2011 15/12/2011 16/02/2012 29/03/2012 31/05/2012 18/07/2012 13/09/2012 01/11/2012 18/12/2012
Dates
The graph shows the average gross yields established in three investment sectors at Allsop residential auctions. Across the year ASTs have seen an average yield of 9.4% (2011 8.4%).
For 2012 London ASTs in our sale rooms showed an average return of 8.9% with those outside of London closing at 9.64%. The AST market remains reasonably stable. Tenant
demand and rental levels are favourable to landlords. The average age of the first time buyer is 36 and is likely to remain at a high age level for as long as mortgage finance remains
tight. Those who may have bought for the first time, were finance available, are now renting. This increase in demand for smaller rented homes is likely to have been met by reluctant
landlords who have failed to sell into a constrained first time owner occupier market and have been forced to let.
2012
allsop residential auction review
analysis
Buyers
Global and domestic interest shown
in the December Catalogue
240,000
1,467,200
188
Over
Visits
1
Data provided by Google Analyitics
108,133
registered subscribers
visits to our online catalogue in 2012
countries and territories
The reach of the Allsop auction marketing has improved globally in 2012. Our on line catalogue is now distributed worldwide to over
220,000 registered subscribers. In December, the on line catalogue generated 152,064 hits from 142 countries, the largest foreign
interest being from Ireland, the US, France and Spain. This exposure is relied upon by many clients, particularly banks, public bodies
and charities, to support their duty to establish best price on the day of sale.
2012
allsop residential auction review
highlights
Vacant
Lot 79 – November
Lot 18 - July
Lot 25 - July
Lot 86 – November
The Torbeckhill Estate, Lockerbie Scotland
Nightingale House, St Katharine’s Dock
Myddelton Square, Finsbury, London
The Old Swan Inn, Radwell, Bedfordshire
An attractive country house and mature grounds
of approximately 26.65 hectares (73.26 acres).
A leasehold self-contained purpose built ground floor flat
with views across St Katharine’s Dock.
A leasehold well located self-contained third floor flat.
A freehold grade II listed former public house building.
Guide price: £380,000 - £400,000Result: £430,000
Guide price: £170,000 - £180,000Result: £340,000
Guide price: £575,000+Result: £685,000
Guide price: £180,000 - £200,000Result: £220,000
Assured Shorthold Tenancies
Lots 57-62 – November
Lot 198-203 – September
Lot 139A-139F – May
Lot 70-75 - February
Skyline Apartments,
St Peters Square, Leeds,
West Yorkshire
20 flats sold over 4 auctions.
All let.
Lot 117 - February
Lot 100 - September
Endcliffe Apartments, Margate, Kent
Grosvenor Gate, Leicester
A freehold unbroken purpose built corner block in seafront
location comprising 29 flats, 28 subject to assured shorthold
tenancies and one vacant.
34 self-contained flats and three town houses, 7 flats and
one town house subject to long leases, 24 flats and two town
houses subject to assured shorthold tenancies and six flats
vacant. Total current rent reserved £130,760 per annum.
Guide price: £1,300,000 - £1,500,000Result: Sold Prior
Guide price: £1.1M - £1.2MResult: £1.12M
Total raised: £1,700,500 (sold in separate lots)
Total Income per annum: £154,500
Average Yield: 9.1%
2012
allsop residential auction review
highlights
Regulated
Lot 4 - February
Lot 6 - November
Lot 5 - July
Lot 98 - november
Putney, London
Highfields, East Sussex
Fulham, London
Broughton, Northamptonshire
A leasehold self-contained first floor flat
subject to a regulated tenancy.
A freehold semi-detached house subject
to a regulated tenancy.
A leasehold self-contained purpose built lower
ground floor flat subject to a regulated tenancy.
A freehold semi detached house subject
to a regulated tenancy.
Guide price: £150,000+Result: £1.32M
Guide price: £175,000+Result: £210,000
Guide price: £240,000+Result: £238,000
Guide price: £80,000+Result: £92,000
Yield: 4.34%
Yield: 4.43%
Yield: 2.45%
Yield: 5.8%
Lot 37 – February
Lot 104 – November
Lot 140 - May
Lot 121 - november
Blackheath Standard, London
Dalston, London
Kirklinton Hall, Cumbria
Wilburton, Cambridgeshire
A freehold detached building arranged to provide six
self-contained flats, one self-contained studio flat and
an mot garage. Seven flats vacant, garage subject to a
commercial lease. Potential for extension and redevelopment
subject to all necessary consents.
A freehold detached building with potential
for redevelopment.
Freehold grade II listed former country house on site
of approximately 5.62 hectares (13.89 acres).
Planning permission for restoration, conversion
and new wing to form 22 dwellings in total.
A freehold reversionary ground rent investment secured
upon a 60 berth marina, a house, garages and caravan
pitches on site of approximately 2.8 hectares (6.9 acres)
and producing £7500 pa. Reversion 2021.
Guide price: £1M - £1.1MResult: £1.32M
Guide price: £250,000 - £300,000Result: £1.12M
Guide price: £300,000 - £500,000Result: £311,000
Guide price: £75,000 - £100,000Result: £210,000
Other
2012
allsop residential auction review
highlights
Commercial to Residential
Lot 25 - May
Lot 236 - July
Lot 26 - May
Lot 269 - July
St Albans, Hertfordshire
Wakefield, West Yorkshire
Potters Bar, Hertfordshire
Nottingham, Nottinghamshire
A freehold mid terrace building arranged to provide a ground floor
lock-up shop unit with office accommodation behind and above.
Ground floor shop unit subject to a commercial lease.
Remainder vacant.
Planning permission for change of use of office
accommodation to provide nine self-contained flats.
Three freehold grade II* listed mid terrace buildings.
Currently arranged to provide office accommodation
extending to approximately 2,033 sq m (21,889 sq. ft).
Potential for change of use to residential subject
to obtaining all necessary consents.
A freehold detached office building extending to
approximately 649 sq m (6,991 sq ft). Entirety subject to an
FR & I lease. Planning permission for conversion of existing
office building to form 14 residential units (2 x three bedroom
flats, 10 x two bedroom flats and 2 x one bedroom flats).
A freehold corner office building with ground floor
parking subject to a commercial lease.
Guide price: £750,000+Result: £1M
Guide price: £350,000 - £400,000Result: £380,000
Guide price: £1.1M - £1.2MResult: £1.34M
Guide price: £300,000 - £400,000Result: £600,000
2012
allsop residential auction review
conclusion
Conclusion
Results 2012
Allsop’s results in the residential sector indicate a sustained appetite for residential
property at auction. We anticipate good attendance in our rooms and keen competition
for stock throughout 2013.
Demand is becoming less localised and national and international marketing will be
increasingly important in establishing best price. The reach of our database of buyers is
now wider than ever. Remote bidding is on the increase as buyers from 142 countries
show interest in the lots offered. (There was a ratio of 706 remote bidders to 1900 lots
offered last year).
We expect to see at least similar volumes of distressed stock reaching the rooms in
2013. This is likely to include stock from loan book buyers. As a result, first time buyers
and smaller private investors will see further opportunities under the hammer.
Larger lots should increase as sellers take advantage of the certainty and efficiency of
the auction method.
We hope that you have found this brief summary of 2012 informative and look forward
to helping you to buy or sell property at auction over the coming year.
Auction Date
Lots offered
Lots sold
Success Rate
Amount Raised
December
267
226
85%
41,593,000
November
278
243
88%
48,671,749
September
258
230
90%
37,793,483
July
254
225
89%
36,590,750
May
346
282
82%
62,655,854
March
213
187
88%
37,018,501
February
284
256
91%
49,492,450
Total
1900
1649
88%
£313,815,787
Contacts
Gary Murphy llb frics
Chris Berriman ba (hons) mrics
Michael Linane mrics
Partner and auctioneer
Partner and auctioneer
Partner
+44 (0)20 7344 2619
+44 (0)20 7344 2639
+44 (0)20 7344 2623
[email protected]
[email protected]
[email protected]
Jourdan Prowting
Stuart Gayer lmnava
Richard Adamson
Partner
Partner
Partner
+44 (0)20 7344 2675
+44 (0)20 7344 2626
+44 (0)20 7344 2614
[email protected]
[email protected]
[email protected]
www.allsop.co.uk