Residential Auctions 2013 Annual Review

Transcription

1 Residential Auctions 2013 Annual Review

2 Residential Auctions 2013 Annual Review

3 Index INTRODUCTION PROPERTY ANALYSIS ANALYSIS REGIONS YIELDS ANALYSIS BUYERS HIGHLIGHTS OF THE YEAR 2014 CONTACT DETAILS

4 Total raised in m February 41 March May July 52 September 39 October 39 December 60 Residential Auctions 2013 Annual Review

5 Introduction Allsop Residential held seven major UK auction sales last year, all from The Cumberland Hotel, London. In total, 1554 lots were sold raising 336.5m. This is over 7% up on sales receipts in 2012 ( 314m) and reflects a success rate of 88% (the industry average over the same period is 76%). In total the firm has raised over 777m from auction sales in the UK and Ireland in the past 12 months endorsing its position as the leading real estate auctioneer in both countries. Confidence in the residential market has grown steadily over the year. Interest rates have remained low. The availability of mortgage finance has eased for both occupation and investment. Government incentives, such as Help to Buy, have bolstered demand. Overseas investors have identified London property as a safe haven for cash. Developers are building homes again. Investors are building to rent. Traders are turning a profit. Rental values are improving as first timers struggle to buy and are forced into rented accommodation. Central London prices surged ahead with values in the suburbs and Home Counties following closely behind. A general enthusiasm for property returned and our auction rooms swelled to capacity as the year went on. For Allsop, 2013 culminated with a 60m sale on 17 December, the largest end of year total raised by any UK auction house since is going to be an exciting year Total Raised 336m 314m Lots sold Success Rate 88% 87%

6 Property Analysis Types of Property offered in 2013 Investment/Vacant 200m m 750 Part Vacant: 11.1 % Total ( m) 100m 50m Lots Offered Pure Investments: 40.7 % Pure Vacant: 48.2 % 0m Pure Vacant Pure Investments Part Vacant Value Value Lots offered Lots offered The proportion of vacant lots offered by Allsop in 2013 increased from 48% in 2012 to 55%. The number increased from 915 to 976, providing a broader choice of stock for owner occupiers, developers, local builders and dealers. The number and proportion of income producing lots fell slightly from 774 and 41% to 683 and 38%. Fewer part vacant lots were offered, falling from 211 (11% of all lots) to 122 lots (7% of the total). 0 Commercial/Residential Graph 400m m 1500 Mixed Use: 8.5 % Total ( m) 200m 1000 Lots Offered Commercial: 100m % 0m Residential Lots Commercial Lots Mixed Use Lots Raised Raised Raised Lots offered Lots offered Lots offered Residential: 86.9 % The proportion and number of commercial lots with potential for residential use offered in our residential catalogues in 2013 remained similar to the previous year. 82 lots in this category (4.6% of the total) were offered (81 in 2012 and 4.3%). Permitted development rights, allowing owners of office buildings to switch to residential use, have contributed to this continued supply. Pure residential lots increased by proportion from 84% to 87% at the expense of mixed use lots. These fell in number from 228 (12% of the total offered) to 151 (8.4%). Residential Auctions 2013 Annual Review

7 Types of sellers represented in 2013 at Allsop Residential Auctions Significantly, the proportion of residential distressed properties offered at Allsop auctions fell from almost half the total (47%) in 2012 to just over a third (35%) in This is consistent with the current economic recovery. Market confidence improved contributions by property companies. 29% of all lots offered in 2012 came from this source rising to 37% in The proportion of lots offered on behalf of private sellers increased from 9% to 13%. We expect these trends to continue in Private Sellers: 13.0 % Miscellaneous: 2.0 % Trustee: 1.0 % Local Authority: 2.0 % Statutory Body: 2.0 % Distressed: 35.0 % Property Company: 37.0 % Housing Association: 8.0 %

8 Analysis Regions Average price achieved for vacant single unit houses and flats in 2013 at Allsop Residential Auctions Regions NE 39,957 NW 67,769 SE 184,972 SW 150,900 M25 399,809 Midlands & East Anglia 110,425 Wales 152,556 Scotland 60,055 Yorks & The Humber 55,688 Northern Ireland 44,000 Residential Auctions 2013 Annual Review

9 Regional Distribution of properties in 2013 offered at Allsop Residential Auctions Northern Ireland: 3.8 % Yorkshire & The Humber: 5.5 % Scotland: 1.6 % Wales: 3.2 % North-East: 5.5 % North-West: 10.3 % Midlands & East Anglia: 11.9 % South-East: 17.6 % South-West: 5.3 % M25: 35.4 % The proportion of lots offered within the M25 in 2013 remains around a third of the total (35% from 33% in 2012). However, the average lot size in this region has increased from 352,800 to 399,809, a jump of 13%. This demonstrates the strength of the London market. Within the South East (excluding the M25) our average lot size has increased from 167,000 to 184,972 (up 10%). comfortable releasing higher value lots to the market. In 2013, 56 lots over 1m were sold at auction by Allsop, compared with 43 in 2012 and 33 in The regional distribution of Allsop residential lots across the UK remains relatively unchanged. Notable however is the increase in Northern Irish properties offered from 2% to 4% of the total. Not only have values risen, and are expected to rise further this year, but sellers are now far more

10 Analysis Average Assured Shorthold Tenancies Yields Established in 2013 at Allsop Residential Auctions Overall Average London Only Outside London 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% The bar chart shows the average yields on Assured Shorthold Tenancy (Buy to Let) investments throughout Across the UK, AST yields were 10.2%, up from 9.45% in However, in evidence of the increasing polarisation between London and the rest of the country, average yields in the capital fell from 8.9% to 7.2%. Yields elsewhere moved out from 9.6% to 11.1%. London has become the principal focus of the Buy to Let investor. Despite increased rental levels partly driven by occupiers who cannot afford to buy, continuously rising capital values have compressed returns. Residential Auctions 2013 Annual Review

11 Average gross yields at Allsop Residential Auctions 12% % 8% Percentage (%) 6% 4% 2% Feb '12 Mar '12 Apr '12 May '12 Jun '12 Jul '12 Aug '12 Sep '12 Oct '12 Nov '12 Dec '12 Jan '13 Feb '13 Mar '13 Apr '13 May '13 Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Regulated Assured Shorthold Tenancy Ground Rents Bank of England Base Rent Outside of the market rented sector, yields have remained steady in the Allsop auction rooms. Regulated tenancies remain sought after by the top corporate investors and there has been a small dip in the average yield from 4.8% in 2012 to 4.6% in Ground rent yields (80 years plus unexpired) have also remained steady, showing a small drop from 6% to 5.9% over the same period.

12 Analysis Buyers International interest shown in the December 2013 catalogue 0 140, m visitors to the online catalogue from 194 territories Residential Auctions 2013 Annual Review

13 Domestic interest shown in the December 2013 catalogue Over 220,000 registered subscribers The reach of the Allsop online catalogue continues to grow with over 1.56m visits last year from 194 territories, of which nearly 40% were new visitors. Each of our catalogues is distributed globally to over 220,000 online subscribers. Last year, the top three overseas locations for buyer interest in our auctions, were Ireland, the United States and Spain although we are noticing increasing interest from Hong Kong, China and Singapore. *Data provided by Google Analytics

14 Highlights of 2013 FEBRUARY AUCTION 1,425,000 FEBRUARY AUCTION > Lot ,000 APRIL AUCTION > Lot 186 Temple Street, Heywood, Lancashire Leasehold unbroken purpose built block 15 one bed self-contained flats Seven flats subject to assured shorthold tenancies, nine flats vacant Car parking to the rear Producing 32,370 per annum > Lot 91a South Audley Street, Mayfair, London, W1 500,000 Lower Woodfield Road, Torquay, Devon Freehold detached Grade II Listed building Arranged to provide ten self-contained flats Nine flats subject to assured shorthold tenancies One flat vacant Private car park Well located leasehold self-contained leasehold second floor flat Vacant possession Two bedrooms (one with en-suite) Extending to approximately 124 sq m (1,335 sq ft) APRIL AUCTION 2,080,000 MAY AUCTION > Lot 56 1,610,000 MAY AUCTION > Lot 258 The Headlands and The Courtlands, Hayes Road, Cardiff 20 long leasehold two and three bed apartments Unique coastal line development All apartments vacant Offered collectively 352,500 Former Magistrates Court, Main Road, Essex Freehold detached former Magistrates Court Potential for redevelopment Vacant sq m (8,513 sq ft) Approximately hectares (0.580 acres) By order of HM Courts & Tribunals Service > Lot 34 Guilford Street, Bloomsbury, London, W1 Freehold Grade II Listed building 16 bedsitting rooms Planning application submitted for single family house Vacant possession sq m (3,618 sq ft) JULY AUCTION > Lot 25 3,200,000 Thurloe Street, South Kensington, London SW7 Freehold well located mid terrace building Arranged as five self-contained flats Each flat subject to an assured shorthold tenancy Producing 105, per annum Residential Auctions 2013 Annual Review

15 JULY AUCTION > Lot 34 1,350,000 Mount Street, Mayfair, London W1 A two bedroom long leasehold self-contained 4th floor flat Views across Berkley Square Landlord s consent to internal alterations Planning permission for fifth floor roof extension OCTOBER AUCTION 2,450,000 SEPTEMBER AUCTION > Lot 29 2,650,000 Gordon Road, Bounds Green, London N11 Freehold unbroken purpose built block Nine x two bedroom flats and five garages Eight flats subject to assured shorthold tenancies, one vacant Producing 89,760 per annum > Lot 25 Egerton Gardens, Knightsbridge, London, SW3 SEPTEMBER AUCTION > Lot ,000 OCTOBER AUCTION > Lot 63 1,575,000 DECEMBER AUCTION > Lot 21 1,235,000 Brownlow Way, Bolton, Greater Manchester 12 leasehold self-contained flats Nine flats subject to assured shorthold tenancies, three vacant Offered collectively as one lot Producing 42,660 per annum On the instructions of Receivers Commonside Court, Streatham, London SW16 A freehold part reversionary purpose built block Two ground floor shop units and 15 self-contained flats above Nine flats subject to ASTs Two shop units and six flats subject to leases Producing 94,325 per annum Springdale Road, Stoke Newington, London N16 Freehold end of terrace building Internally arranged to provide three self-contained flats Vacant possession By order of a Housing Association A long leasehold self-contained lower ground and raised ground floor maisonette Subject to an underlease expiring on 19th September 2015 Producing 60 per annum sq m (1,769 sq ft) DECEMBER AUCTION > Lot 103 Mindrum Terrace, North Shields, Newcastle-upon-Tyne 850,000 A long leasehold unbroken detached purpose built block of 17 self-contained flats Each flat subject to an assured shorthold tenancy Producing 91,800 per annum By order of LPA Receivers

16 Outlook for will show continued demand for London, fuelling further growth and putting more areas of the capital beyond the reach of the first time buyer. At the time of writing, average house prices in 34 separate areas of London now exceed 1m. Despite the Government s Help to Buy scheme, renting is now the only option for many. As a result, rental levels in London will continue to rise, thereby luring investors from the regions. The prospects of exponential total returns (rental and capital appreciation) will attract larger crowds to the auction rooms. Ultimately, many parts of London will become increasingly unaffordable for the smaller investor. Regional investment will be the only way to spread risk across locations and prices will rise accordingly in those provincial areas where tenant demand is most sustainable. Property price inflation also provides the perfect background for the dealer market, although as always, the deal will be in the buying - and with such healthy demand, that will present its own challenges. With market confidence building, auction houses will need to manage sellers expectations. Inflated reserves will, as in all market scenarios, deter bidders and affect success rates. Sensible pricing will be the key to harnessing competition will be a year of notable recovery. We are in for an exciting ride. Residential Auctions 2013 Annual Review

17 Future Auction Dates for th & 13th February th & 27th March th & 29th May th & 17th July th & 18th September th & 30th October th & 18th December 2014

18 CONTACTS Gary Murphy Partner and auctioneer +44 (0) Chris Berriman Partner and auctioneer +44 (0) Stuart Gayer Partner +44 (0) Jourdan Prowting Partner +44 (0) Richard Adamson Partner and auctioneer +44 (0)