Pandemic accelerates growth in online property auctions

BidX1 digital platform secured €200m from the sale of over 900 properties across Ireland

Number 1 Shop Street,  Galway sold through BidX1 for €2.006m, a net initial yield of 7.25%

Number 1 Shop Street, Galway sold through BidX1 for €2.006m, a net initial yield of 7.25%

 

We have seen a remarkable increase in both the volume and average value of commercial assets being traded on the BidX1 digital platform in 2020, indicative of a growing confidence in online real estate transactions. Volumes have increased by almost 200 per cent year-on-year, while the average value has increased by almost 30 per cent.

The pandemic has accelerated the trend towards a tech-focused approach to property sales. More than 900 Irish properties were sold through the digital platform this year, and over €200 million raised, with commercial sales making up 40 per cent of this value.

This year has also seen a 50 per cent increase in the number of international investors registering to bid on Irish properties

In terms of asset type, mixed-use properties accounted for more than a quarter of BidX1 commercial sales, evidence of a growing focus on “value-add” opportunities. With yields softening, investors are seeking returns through purchases which offer asset management or development opportunities. Such an assessment tallies with figures for development land sales through the platform – sites with development potential made up 16 per cent of commercial sales.

Interestingly, retail accounted for 24 per cent of total sales which illustrates that if a property is priced correctly, there are still active buyers. In September, we priced a prominent retail landmark at number 1 Shop Street in Galway city centre, which is let entirely to Three Ireland at an attractive yield of 8.3 per cent (net initial yield). Four parties registered for bidding – two domestic and two international – driving the final sale price up to €2.006 million, equating to a net initial yield of 7.25 per cent.

This year has also seen a 50 per cent increase in the number of international investors registering to bid on Irish properties. In the current low interest rate environment, such investors are seeking to diversify their portfolios across multiple markets as the search for yield intensifies. In other words, if you are selling in the current market, reaching a global investor audience is likely to maximise your return.

Our platform provides a liquidity or “demand measure” – calculated by totalling the highest offer from each unsuccessful bidder. It’s a hugely significant figure for us as agents because it provides a concrete indicator of unspent capital, and therefore demand. Between June and October, for example, the total liquidity available was more than €192 million. In that period alone, 1,500 underbidders were left empty-handed; these were pre-qualified buyers who had committed a deposit prior to bidding, and all are actively seeking to invest capital in Irish real estate.

Liquidity – unspent capital – on commercial real estate specifically was above €90 million in 2020. Demand remains robust.

Johnny O’Connor is head of investments at BidX1 Ireland