The first six months of 2020 saw some of the biggest changes in the property market to date. Whilst a large portion of the sector went into hibernation, the auction market barely missed a beat, with 348 sales raising £246m by the end of July, which has now increased to £295m from 427 sales, showing growing appetite among buyers and sellers in spite of the very strange economic backdrop.

 Off to a good start

The year started on a highly optimistic note, largely because of the ‘Boris Bounce’ and the sense of change in the air, which could also be felt during our first auction in 2020, resulting in £70m worth of sales. Little did we know that a couple of months into the year the world would go into lockdown, presenting the market with a host of unknowns:

would buyers bid without inspecting? What would the impact be on the struggling high street? How hard would prices be hit across the board; will any sector prosper from this malaise? Among other measures taken to support the economy, the Bank of England cut interest rates to 0.1%. The stock market fell dramatically, and the dividend income fell away with it. At the end of April, over half of the FTSE 100 companies had reduced their dividend payments, forcing investors to think of alternative ways to allocate cash and secure income. Unsurprisingly, many of them turned to property.

Auctions, but not as you know them

The UK auction market suffered from a series of cancelled events, but for Allsop, lockdown presented an opportunity to further develop our digital offering in a very short space of time, showing the power of force majeure events to accelerate change. Our web site has added to the digitisation of property sales with buyers already able to produce their own 3D tours on their phones, garner comparables and legal research from their desktops and add as much extra data as they need to influence their decision. Hosting property auctions online has enabled Allsop to continue presenting appealing opportunities to a receptive public. Out of 400 or so buyers that have taken part in our auctions, only 12.5% have used finance to exchange contracts, while the rest readily transacted in cash. The success of our new online offering has assured buyers and sellers that the commercial auction property market is still very much alive despite the challenging times. In tricky markets like this, both buyers and sellers seek commitment, which makes the unconditional contract that underpins auctions ideal for both parties.

 Identifying the right opportunities

In today’s unstable world, sustainable income opportunities have never been more attractive. Having learnt the lessons of COVID-19, buyers have been paying more attention to their tenants’ track record and avoided dealing with wellfinanced occupiers that are seen to be exploiting the Government’s tenant protection scheme.

In terms of assets, there is a lot of enthusiasm for well-let convenience stores with corporate tenants, such as Co-op, as yields harden. There is a renewed interest in the suburbs where rents might have flatlined over the last decade but now look affordable as they have benefitted from targeted support through the job retention scheme and rates holidays, along with increased local spend as workers stay away from city centres. The format of the auctions may have altered, but our fundamental approach hasn’t – despite not being in the ballroom, we still take time to speak to every buyer and conduct regular surveys. The final quarter of the year will be no less interesting as high street retail still has to find its level and buyers chase sustainable rental income from other assets such as multi-let industrial, the alternative sectors and diversify their risk across mixed-use opportunities. We look forward to our next auction on 3 November, which, as always, will provide plenty of food for thought for buyers and sellers alike.

Visit our auction pages for more information and dates on all forthcoming auctions

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