Thank you for attending our August commercial property auctions, which took place throughout South Africa. We were again surprised at the high level of attendance at all our sales with huge numbers of registered bidders. All our sales tracked strong demand from investors. Our commercial auction teams offered 112 lots in four venues and at the time of writing R252.24million had been raised, reflecting a 52% success rate.
Our bumper post world cup July auctions indicated strong buyer sentiment but this weakened in August, reflecting local and global concerns about the extent of the current economic downturn, now into its second year.
In terms of bidding activity, our auction rooms were not as busy compared to previous auctions held this year. Buyers have recently found it even harder to raise finance, causing the market to be increasingly selective and putting prices under renewed pressure. However, we continue to see a number of new private investors seeking better returns for their cash, with retail and city-based properties, as well as secure long-leased properties attracting competitive bidding.
To date our teams have sold 557 lots this year and raised in excess of R2.29billion, with an impressive combined success rate of 62.4%. This high volume of sales provides us with an unrivalled knowledge of buyers currently in the market.
There is strong demand for well positioned properties and blocks of flats. Surprisingly, we’ve had several vacant land sales and several vacant buildings, which attracted strong buyer demand.
In terms of regional variances; the lowest yields are being paid in the Western Cape with slow activity in KZN. The Eastern Cape success rate at 94% has beaten all other regions and under Mike Bosch’s guidance we have been surprised at the demand for local real estate.
Some highlights from our August Auctions:
– Average lot size R5.74million (R4.68million in August ‘09).
– 12 Lots sold for more than R2million (19 in August ‘09).
– 14 Lots achieved yields at or below 12%, five of which were at or below 10%.
– 11 Lots arose from liquidations and/or insolvencies.
– Five lots arose from banks, reflecting an average lot size of R1.78million.
– Retail store, let to Metcash, sold in Ermelo, Mpumalanga for R11million.
– Vacant industrial building sold in East London, Eastern Cape for R12.1million.
– Vacant industrial building sold in Potchindustria, North West Province, for R12.9million.
– Fuel Station in Parow, Western Cape sold for R7.7million.
– Vacant residential development site sold in Eerste River, Western Cape for R3.55million.
– Vacant Industrial warehouse sold in Southgate, KZN for R4.85million.
In September we will bring well over R1 billion worth of commercial property to our auction floors and we look forward to welcoming our investors to these bumper sales.