64% succes rate for recent auction sales
Auction Alliance Commercial Auction Team held their tenth monthly sales
in Sandton yesterday and at the time of writing R224million has been raised,
reflecting a success rate of 64%.
Comments Neville Bear of Auction Alliance, "We were truly delighted with the October results which not only attracted impressive crowds but also spirited bidding. Auction Alliance are the only South African auction house to hold four commercial auctions every month in all parts of the country and we will reach over R5,5billion in sales this year alone. These auctions, and our national footprint, not only make us the largest auctioneer by volume and value but provide us with an unrivalled knowledge of prices being paid and buyers currently in the market."
"We are finding the strongest demand for retail properties with enormous demand for fuel station sites. At the auction we sold a shopping centre in Mafikeng for R39,3m reflecting a net yield of 9.4% and a Petrol Station in Soweto for R3.56m."
Industrial property, which is closely allied to the retail sector, is
also attracting strong demand. We sold an 8000m industrial
facility in Robertville for R17.9m A-Grade office space is strong and
achieving good prices, but B and C-Grade Office space is weak. We are
having great success with apartment blocks across the country and yesterday
we sold a block of 64 apartments in Lakeview Florida for R11.6m. Development
land is difficult but despite negligible demand we sold prime vacant land
in Krugersdorp for R8.9m, adds Bear.
* Average Lot size R6,210,000 (R8,420,000 in March 2010 and R5,100, 000 in October 2009)
* Lots sold under the hammer achieved an average of 5% below reserve
* 7 Lots sold over R5million, 3 of which were over R10million
* Average Retail Yield - 9.78% (11.23% March 2010) although this masks the difference between long and short income where the spread between the two has widened.
* Average Office Yields 10,23% (11,96% March 2010) although A-Grade offices have been selling at average yields of 9,9%.
* Average Industrial Yield - 11.08% (11.59% March 2010). Operating costs and municipal costs have put pressure on yields
It should be noted that other factors such as location and covenant strength
have a major bearing on the yields achieved. Properties with strong tenants
are achieving very low yields.
With interest rates remaining at historically lows for both borrowers
and savers the current market conditions provide an excellent opportunity
for anyone thinking of selling good quality income. Competitive bidding
between cash rich private investors has, in some cases, led to better
prices than those achieved in 2007 and with a limited supply there remains
a lot of unsatisfied demand.
Article by: www.auction.co.za