Blog | Commercial Auction | Industrial & Logistics | Retail

2021 through the eyes of a property investor

The market has very clearly bought into our digitalised auction process – Allsop has sold over £481m worth of assets since its last live commercial auction in February 2020. Even though we continue to spend a lot of time talking to buyers and sellers alike, the meeting of minds and sharing of thoughts in the auction room is, of course, hard to replace.

In order to gain more insight into our buyers’ and sellers’ considerations and expectations, we commissioned an independent survey at the end of last year, which resulted in a range of interesting and somewhat counterintuitive findings. The vast majority of the survey respondents were buyers, which makes the findings particularly insightful for those looking to get a steer on the investment sentiment within the commercial property market.

 

Despite an array of negative headlines surrounding retail, our survey has shown that there’s a lot of appetite for retail and industrial/warehousing assets, which were picked as the top investment choices by 38% and 39% of respondents, respectively. From the additional comments they’d provided, we’ve learnt that the recent changes to Use Classes Order have been a major factor in generating such high levels of demand. These reforms have resulted in greater flexibility when it comes to repositioning assets, allowing flexibility of commercial use and making it easier to convert commercial units into residential. Given the decline of the high street in many areas of the country, this is a welcome and necessary development which has stimulated the market

The leisure sector, unsurprisingly, didn’t come out among the most appealing (with only 11% of investors looking to buy into it this year) having been severely hit by the pandemic, however, assets in sought-after locations and with a clear redevelopment potential remain of interest.

We didn’t expect to discover that Covid-19 made no impact on the investment decisions of 43% of the respondents. In the meantime, nearly one-fifth (18%) admitted that the health crisis had a positive influence on their buying choices.

This is a little hard to interpret, but the market is swift to react to disruption of any scale, and prices have adjusted very quickly, which of course, provides opportunities for the cash rich investors who are at the core of our market.

The commercial property market has typically been one for long-term investment, which is reflected in how little the arrival of the vaccine impacted investment decisions, with 62% of participants saying it made no difference to their decision-making. More investors were concerned about the prolonged ban on evictions for non-payment of rent– 38% said the last extension had impacted their buying decisions.

One of the more striking details was the proportion of capital held by investors in property – for two thirds of respondents, property accounted for 60% or more of their total investment portfolio. This shows a great reliance on a diversified approach to benefit from the highs and accommodate some of the lows in a disrupted market.

Lastly, respondents were showing appetite to buy and hold rather than sell, but if 9% of the entire database of 57,000 do sell in the next 12 months, there will be plenty of opportunity to invest those cash reserves.

The full survey can be accessed here, and we look forward to sharing more market observations with you over the course of this year.

Allsop would like to thank all those who have taken the time to share their views on the market as part of our survey – your insights are invaluable. In recognition of your time and effort, we have made a contribution to LandAid, a property industry charity and our long-term partner.

George Walker

Partner & Auctioneer Commercial Auction

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