A growing number of private investors, previously focussed on the buy-to-let market are now buying commercial property at auction.
Allsop and Acuitus, the two largest commercial auction houses, both report evidence of a shift, in Estates Gazette’s new Property auction buyers’ guide, out this week.
Acuitus research shows that private investors bought £3.6bn of commercial property in 2015, of which £745m, or just over 21%, was sold at auction. This is the highest volume sold to private investors at auction since 2006.
Richard Auterac, chairman and auctioneer, said evidence from the auction room and the firm’s private finance arm indicated a “shift towards commercial property on the part of some residential investors”.
It comes as the government seeks to reduce investor appetite for residential, with stamp duty increased by a further 3% on second residential properties and tax relief on residential rental income to be phased out by spring 2017.
Allsop partner and commercial auctioneer George Walker said his firm’s buyers’ questionnaire revealed a 20% rise since last year in buyers with up to £1m to invest. “Many of these, having already had success in the residential world, are looking to build a portfolio of commercial investments,” he said. Walker added that “the real draw must be the longevity of the income”.
Allsop partner and residential auctioneer Gary Murphy said tax changes were the biggest cause of concern to residential investors. But he added: “A combination of low interest rates, an ingrained affection for property in the UK’s psyche and a history of strong capital growth on residential investments means demand is still there.”
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