A clearance rate of 90.80 per cent and deals totalling $426.795 million are the standout results in Ray White Commercial’s latest auction performance insights.
The new report has been released as the company prepares for its inaugural quarterly auction week event in March when properties will go under the hammer in Brisbane, Sydney, Melbourne and Perth.
Total sales for 2017 from 239 auctions are a leap of more than $200 million on the previous calendar year, when 166 auctions yielded $214.177 million — a selling rate of 87.35 per cent. In 2015, the clearance rate was 82.61 per cent.
Ray White Commercial Head of Research Vanessa Rader says a competitive auction environment resulted in 74.07 per cent of properties selling under the hammer in 2017 and a further 18.52 per cent sold prior.
“In early 2017, we saw that the number of properties sold prior to auction slowed down,” Ms Rader says.
“However, urgency returned to the market as buyers rushed to purchase before the end of the year and we saw some pick-up in properties sold before auction day.
“The remaining 7.41 per cent of deals concluded shortly after the auction campaigns as owner and buyer price beliefs became more aligned.”
Retail (95.74 per cent) and industrial (93.51 per cent) were the standout asset classes for clearances. Office assets (90.48 per cent) were not far behind.
The highest average sale prices were $2.231 million (retail) and $953,140 (industrial).
“These asset classes have usually been actively pursued by local investors and owner-occupiers taking advantage of the low interest rate environment and capitalising on falling yields and rising rents in some locations,” Ms Rader says.
The average number of bidders rebounded in the second half of 2017 after a year of investor caution as strong yield compression hit many markets.
Industrial assets, which recorded an average of only 2.4 bidders during the first quarter of 2017, bounced back to 4.87 bidders during the fourth quarter.
Michael McCullagh, Head of Agency Operations — Commercial, expects the strong performance to continue at the first Ray White Commercial Auction Week event, which kicks off on March 5.
“The Ray White Commercial network has a firm history of success in the auction arena keeping clearance rates elevated,” Mr McCullagh says.
“An average of five registered bidders per property means there is increased competition for an asset.
“By creating stronger competition among buyers, it puts us in a strong position to negotiate the best result available in the market today for our clients.
‘Auction is the purest form of selling real estate as it allows the market to determine the value of an asset.
“Buyers appreciate the transparency of bidding at auction because they can openly see what other buyers are prepared to pay — and make a decision if they are prepared to improve upon that.”
Auctions will be held in Melbourne on March 6, in Sydney and Perth on March 7, in Auckland on March 8 and in Brisbane on March 9.
For Ray White Commercial Auction Week program information, contact:
Head of Agency Operations — Commercial
0403 426 474
For Ray White Commercial research information, contact:
Head of Research
0432 652 115
For Ray White Commercial media inquiries, contact:
PR & Communications Manager
0411 449 625