Our Buyers Survey, asked at the point of exchange since 2012, picks up on trends and sentiments amongst buyers which helps us look forward.
Despite the UK economy being placed into hibernation in March and the negative connotations around commercial property within the press, demand from buyers is at the highest recorded level since 2018. 98% of buyers stated their intention to buy another commercial property at auction (93% in 2019). Through this buyers are telling us that they are comfortable with the buying process at auction and satisfied with their purchases.
Of the successful buyers at our auction 78% have bought a commercial property at auction before (83% in 2019 and 82% in 2018). This results in 22% of buyers being new to commercial property at auction, a reflection of the far reaching appeal of both the sector and the purchasing method for buyers.
In their pursuit for the right investment, our survey has found that buyers are widening their geographic net and looking outside of their home region. 58% of buyers have stated that they are located outside of the region they have purchased their property in (50% in 2019). This rise is perhaps reflective of buyers’ behaviour becoming more deal driven.
For a long time, cash has been the dominant method of funding purchases in the auction ‘room’. Our buyers’ survey has found that the dependence on cash reserves to complete is more prevalent than it has been in the recent past with 87.5% of buyers relying on cash to complete their purchases (76% in 2019 and 73% in 2018). This is in line with anecdotal evidence that lenders can
often take their time thus putting deposits at risk, leaving buyers to internally fund their purchases and to refinance following completion.
One of the big questions asked in this year’s survey was if and how Covid-19 has affected buyers’ investment decision making. The responses received were wide and varied, as one might imagine, with each buyer drawing on their different experiences. A number of buyers stated Covid-19 has had no effect on their investment decision making. Others meanwhile are becoming more selective in picking their stock, looking more closely at the tenants underlying business and ignoring their perceived stature. With many tenants not paying their Q2-3 rents buyers are also looking closely into agreements made during this period and where possible are resisting paying for historic and more recent rent arrears.
For those buyers based far away or overseas the resultant travel restrictions have made buying more difficult which is perhaps reflective in the sharp drop off of overseas buyers seen in the auction room this year (2% down from 16% in 2019).
The motivation behind buying commercial property at auction is predominantly driven by income generation, with portfolio diversification, added value and special purchasing also identified. Thank you to all who participated in this survey and contributed towards the results. The results of the prize draw will be announced shortly.
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