EPaper

Commercial property auctions ‘gaining popularity’

Denise Mhlanga Property Writer mhlangad@businesslive.co.za

SA buyers and sellers are turning increasingly to property auctions due to the efficiency and transparency the platform offers, according to industry players.

Listed real estate investment trusts (Reits), family businesses, as well as private and individual investors are selling noncore assets at auctions and replacing them with income-generating properties.

“Auctions enable the facilitation of negotiating with a large pool of prospective buyers all bidding for the property at the same time, unlike the traditional method of selling,” said High Street Auctions director Greg Dart. He said the speed with which property can be sold on auction and transactions being seen as cash deals are big plus points for buyers and sellers.

Dart said that despite market volatility business has been good for many auctioneers. Business profitability depends on experience, market reach, network strength and technology.

“Reits and administrators of multinational and corporate property portfolios comprise over 80% of our client base, hence High Street Auctions has largely been insulated from the economic downturn suffered by the property sector in the past year,” said Dart.

As in most sectors, technology disrupted the real estate sector, forcing many to adapt or become redundant. Before the Covid-19 pandemic, large property transactions were taking place at live auctions.

The pandemic changed that. To stay in business meant embracing technology to facilitate transactions.

NATURAL COMPLEMENT

Companies such as Galetti Corporate Real Estate, a commercial brokerage, saw a gap in the market. Galetti launched its auction business as an additional service in 2020 at the height of the pandemic. Last week, it held its first multiple live property auction with more than 30 properties valued at a total of R650m.

CEO John Jack said that launching the auction business naturally complemented their existing established private treaty and sealed the bid sales platform.

Jack said auction is a highly focused, deadline-driven mechanism in which the price is “discovered”, not asked. “This is a transparent process where bidders signal their intent in the room or online or even by remote dial in. It’s fast; hence our clients like the platform,” he said.

Brett Pozniak, business development executive at Aucor Property, said the commercial property sector was buoyant this year despite rising interest rates and the high inflation.

“We’ve had record transactions this year, with an influx of new entrants in the market, as savvy investors see the upside and substantial opportunity that well-timed property deals can bring,” he said.

Pozniak said the industrial sector remains strong, with continuing demand for quality industrial stock in established nodes that have good road infrastructure and stable municipal services.

Though the retail sector remains under pressure, smaller shopping centres are still outperforming and continue to drive value and returns for investors, he said.

HOT BUYS

“The most surprising sector within the property asset classes is undeniably commercial office space, which has rebounded significantly as people return to the work environment, postCovid,” said Pozniak.

Jack said their multiple live auction was so popular that some properties were sold before hitting the auction floor. A lot of stock on the day were industrial properties (mostly tenanted), fuel stations and development assets considered hot buys at auctions.

“Auction is great for stock under R100m unless there is incredible demand for a trophy asset, in which case we take on larger projects,” he said.

Dart said industrial property provided a lucrative revenue stream for High Street Auctions this year. Other sought-after assets include retail and commercial redevelopment assets, particularly older office blocks near tertiary institutions.

COMPANIES

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2022-12-08T08:00:00.0000000Z

2022-12-08T08:00:00.0000000Z

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