Well situated properties, in prime nodes are attracting strong buyer demand, with little interest in vacant or marginal real estate, says the country’s leading auction house.

The group awaits the results from their July commercial multiple auctions; held a week after the world cup, they will serve as a good indicator of market sentiment.

“We were naturally concerned about post world cup investor appetite,” said CEO, Rael Levitt, “and with almost R500 million brought to the market, we have been pleased by strong demand for quality investments”.
 
Levitt felt that there was a “steady improvement” in the market which was confirmed on Thursday at their Cape Town auction, recording a 68% success rate. “Post world cup investor babelaas seems to have been tempered with a strong dose of pre-world cup anti-hangover medication in the form of pre-world cup investor temperance. We are in fact quite happy that the 2010 party is over and investors seem to be back to business and actively looking for cash yielding assets.”

At mid-July sales in Cape Town, Durban, Pretoria, Port Elizabeth and Johannesburg over 92 individual properties were brought to the auction floor. The average retail investment yield was 10,95% compared with 11,6% and a 75% success rate at the Group’s bumper March auction. Levitt said the success rate was a sign of “good appetite in the current market for good quality retail investments.”

Over R130 million of retail investments were sold including two shopping centres in the Northern Suburbs of Cape Town, which came out of the King Financial Services stable. “We had phenomenal interest in these two centres with over 35 registered bidders for a small retail centre in Durban Road, near Tyger Valley Shopping Centre, which sold for R8,6 million” The well known Midville Centre in Durbanville centre achieved a price of R34 million exceeding the market’s expectations.” Said Levitt

Other notable properties came from the Johannesburg sale including a block of flats belonging to Medical group, Netcare, which achieved a price of R11,4 million and was snapped up in very active bidding by Mark Barnes, the CEO and founder of Purple Capital.

“Rosebank, like all prime office nodes definitely seems to be a node that investors will pay top prices for, and with the Gautrain launch happening soon, the market seems extremely buoyant. A building occupied by fuel giant, Chevron was sold for R33 million. Office blocks in Durban, Cape Town, Pretoria and Rustenberg also attracted strong interest. We are simply finding that if a property is vacant, it is extremely difficult to sell. If the property attracts income however, buyers are attracted and realise that property is a great investment, and unlike cash in the bank, will grow yields year after year”.  Commented Levitt

However, Levitt said the sale also showed “The vital need for correct pricing. We are finding that sellers of certain asset types are getting their values wrong and over inflating their expectations. Vacant commercial land sales is simply a disaster and although the company sold several large tracts of land, including a large tract of land in Midrand which was zoned for a hotel and sold for R9,5 million. The property arose from the liquidated Queensgate Property Group. Another piece of land in Centurion achieved a bid of R18,975 million and this will be accepted by the liquidators.

The average lot value was R6,4 million compared with an average lot value of R5,4 million in February. 35% Of the properties arise from liquidations and bank distressed sales.