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On 17 December at the Cumberland Hotel near Marble Arch, auctioneer Gary Murphy of Allsop brought down the hammer on Brookside Close, selling the 13 houses that made up the set of the defunct Channel 4 soap opera for £735,000.
The cheque goes to the receiver. The developer who bought the Liverpool close in 2005 with plans to convert the fake homes and sell them for £2 million is long gone. Another hopeful has bought the set, paying little more than the value of the land on which weeds sprout as high as an elephant's eye.
Has the new owner got a bargain? Well, perhaps. For the wider question of whether there are now bargains to be had at property auctions is starting to excite attention. There are two schools of thought: the optimists who think prices can go no lower and pessimists who think they can.
Six months ago, there were only pessimists, so that's an improvement. Now covert optimists are tiptoeing back into the auction room. They come in the shape of hard-nosed professional investors who think the market will turn in the next six months. At a sale of commercial property by Jones Lang LaSalle on 11 December in the same hotel, auctioneer Richard Auterac says “the room was brimming with experienced entrepreneurs. Many of them have been absent for some time.”
The effect of their absence has been hard felt. Figures from the Essential Information Group published in tomorrow's Estates Gazette show sales of commercial property dropped from £2 billion to £900 million between 2007 and 2008.
Residential sales have fared slightly better thanks to the flood or repossessions. But even here the amount raised shrank by 27%, from £3.9 billion to £2.9 billion.
Murphy says between June 2007 and September 2008 prices of residential property fell by between 15%-50%. Decent-sized second-hand homes in London held up best. Pokey new-build flats in provincial cities fared worst.
But the slide seems to have halted, says Murphy, whose firm sold more than 3000 units in 2008, 75% repossessions. “During the last quarter of 2008, we did not see any serious falls. Prices have reached a plateau. I sense buyers are coming to terms with the fact that there are no more bargains to be had. What we are beginning to see is a sense that the sale prices have now reached a level where the values really work.”
By that he means prices have fallen far enough for the professional investors looking for a return of between 7% and 8% on their cash.
And even the odd amateur: “I am getting calls from people who say they are now getting zero interest on their savings and should I invest in property.”
Allsop's next residential auction is at the Cumberland Hotel on 17 and 19 February. But he remains cautious. “I suspect there may be further falls next year. They won't be substantial. But I suspect they will happen.” It's not quite amateur hour yet.
How the retail rental goalposts have been moved by downturn
When Sir Philip Green returned from his summer holidays, he wrote to landlords demanding they cut property costs for retailers.
Landlords privately vowed to tell the man who owns Bhs and Burtons to get lost. But helped along by the downturn, agreement was reached in November on a range of issues, including allowing smaller retailers to pay their rent monthly rather than quarterly.
Both sides are now in downturn hell. Most landlords simply hope retailers will stay in business.
Polite discussions about “pilot studies” and “joint initiatives” to reduce property running costs have been overtaken by landlords offering to cut service charges to help retailers survive.
But is the deepest cut yet to come? Service charges are less than 10% of the retailer's property costs, the rest is rent.
Landlords will fight rent cuts to the last ditch. That is because the value of a property is largely based upon a multiple of the yearly rental income.
A typical multiple today is 15 times. In very simple terms, if the rent is £10, the property is worth £150. If the rent falls to £8, the value falls to £12.
Of course, if the retailer goes bust, there is no rent — and the property reduces to a multiple of what a valuer thinks a new tenant will pay in rent.
It will be interesting to see what newcomers to the one in 10 empty shops on UK high streets are ready to pay in rent: interesting to both landlords and, perhaps Sir Philip. If only because the figures will become the new comparables when rent reviews are due.
Even Woolies can't put a dent in Sugar's good luck
Sir Alan Sugar is a lucky chap. Accounts filed just before Christmas for his holding company Amshold confirm the star of The Apprentice made £46 million from selling his stakes in Amstrad and Spurs.
That much was already known. But Sir Alan, 61, also made £20 million from his property empire, valued at £319 million six months ago. He managed this by selling three properties for £25 million that were held on the books at just £5 million.
Amshold made a total pre-tax profit of £71 million in the year to June 2008. Perhaps it was this bounty that tempted Sir Alan to buy 57 million shares in Woolworths at a cost of some £3 million sometime in the autumn.
But did he lose the lot when Woolies went bust? Er…no, actually, as the share transaction was never completed.
Apparently this had something to do with the fact that he was buying the stake through an Icelandic bank that failed to deliver the goods.
Ronson's towering ambition for a pay rise in three years
The 2007 report and accounts for Gerald Ronson's Heron Corporation were published last month. They show Ronson's American backers received a healthy £134 million dividend and the man himself took home nearly £13 million from the business, which made £64 million profit on properties valued at £357 million.
Over £10 million of his pay packet came from a long-term bonus scheme. No doubt Ronson, 69, will have to endure a few lean years as his bonus relies upon increases in the asset value of his properties.
But come 2012 he should be fine. The frame of the 670ft Heron tower is growing above Bishopsgate.
He has final permission for a 27-storey residential block next to the Barbican. Both should be finished in three years. The recession will be over by then — won't it?
