October was an exceptional month at the auctions compared to the preceding few months. Analysis provided by David Sandeman from Essential Information Group (EIG) says that: “Overall, lots offered were down almost 23% at 2,459 lots, residential lots offered were only down 13%, with the biggest decline seen with commercial lots down 62%. Against that, the sales rate was up 4.6% overall with both sectors in positive territory. Interestingly, the regional analysis shows that some regions had a very good month, while others were unable to match last October’s figures.”
We mostly focus on the London auctions, which tend to offer stock nationally, although we work with several regional auctioneers when selling clients properties. On a monthly basis we review about 500 auction lots with a goal of securing some of them either for ourselves or our clients. October has been very fruitful for the members of our Auction Buyer's Club, who after several months of being outbid on the attractive lots they were bidding on, purchased four auction properties. One of them before the auction, two at auction and one post auction. There was also one other lot, which our Club member wanted to purchase but he did not attend the bidding as he expected the property to sell for a very high amount. But it didn't!
In this article, I will share several case studies of recent auction lots and the deals that were made. October was definitely good for buyers. The first few auctions of December are showing signs of more balance as some lots sold for very high amounts. Let’s see!
The first case study is a property that our client purchased pre-auction in the Allsop Commercial auction. It was Lot 122 and it consisted of an office building in a predominantly residential area on the outskirts of Edinburgh (Link to Allsop entry: https://bit.ly/123edinburgh). The office was let to a charity that is quite unique and well-funded. So, it provided a good covenant for the 20-year lease that was only signed in 2017. The income of £28,000pa would mean an 8.6% yield on the guide price of £325,000. Our client was interested in the income element but most importantly he was interested in what might be the secondary exits if the income is gone for whatever reason.