There`s life in UK commercial property auctions yet
Released on = July 3, 2007, 10:50 am
Press Release Author = Jimwatson
Industry = Real Estate
Press Release Summary = Britain\'s commercial property market may have passed its peak slightly, but the chance to buy a property at auction has not gone away, property advisor Savills has pointed out.
Press Release Body = Britain\'s commercial property market may have passed its peak slightly, but the chance to buy a property at auction has not gone away, property advisor Savills has pointed out.
Some might have thought otherwise, reading the report published today by the Royal Institution of Chartered Surveyors (Rics), which showed the number of commercial properties sold by auction had dropped substantially in the first quarter of this year.
Matt Oakley, head of commercial research at Savills, said: \"The success rates of auctions probably won\'t go down significantly. You might see fewer lots going through auctions over the next year or so, but I do expect success rates to stay reasonably high.\"
He added: \"The auctions market has always been a popular area to buy smaller lot sized properties. It has grown in popularity over the last four of five years, but probably no more than the increase in volume in the wider property investment market.\"
This optimism contrasts somewhat with the views of Rics, whose figures showed that the number of commercial properties sold at auction in the first quarter of 2007 stood at 1,038, compared with 1,402 in the last quarter of 2006, while the success rate at auction was down from 73 per cent to 69 per cent over the same time span.
Alongside this, commercial transactions were 26 per cent down in the first quarter of this year after a 15 per cent rise in 2006.
All of this prompted Oliver Gilmartin, senior economist at Rics, to say: \"The bull market run in commercial property is coming to an end.\"
Yet Mr Oakley remains upbeat. Stating that last year marked the \"peak of the market\", rather than a major decline, he said the investors Savills had spoken to had indicated that their investment level would be \"above average\" in the next five years, rather than the \"record\" levels of the past two.
Moreover, he said, there is always the capital city, where things never slow down: \"There are still some very hot markets out there. London offices, for example; there is no sign of prices really ceasing to rise or indeed investor interest.\"
The point emerging from the figures today and the reaction from Savills is that the market in 2006 was unusually buoyant and the number of opportunities to buy properties at auction exceptionally high. None of this means the whole market is heading for a crash. Instead, it suggests, on the basis of the views of investors Savills have established, that the market will remain strong without any immediate prospect of repeating the high point of 2006.
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