Commercial market performs stronger than suggested

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Investors should not be deterred to purchase a commercial property as the official clearance rates fail to reflect the true state of Melbourne's commercial property market, an auctioneer has claimed.

Commercial property auctioneer and principal of O’Callaghan Commercial, David O’Callaghan, said while pass-in rates remain high on auction day, commercial property sales are being achieved by agents in the two to three week-period immediately following the auction.

In the first six months of 2011, Mr O’Callaghan took 29 properties to auction, selling only seven on the day, with a clearance rate of 25.9 per cent.

However, after including the number of properties sold immediately after auction, an adjusted clearance rate of 74 per cent was achieved, following the sale of an additional 13 properties.

“I believe the conclusion you can draw from this is that the adjusted clearance rate underscores the success of the auction system for commercial properties in spite of many auctions not receiving an acceptable bid on the day,” he said.

“The market conditions at the moment are judged by agencies as tough, and some may opt for softer tender or expressions of interest methods over auctions, but I don’t think many of those offered in that manner resulted in sales within an accepted timeframe and quite a lot of these offerings remain unsold.”

Mr O’Callaghan expects this year's auction clearance rates in Melbourne’s commercial property market to peak by the end of September, with an adjusted clearance rate of 70 per cent or higher.

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Commercial market performs stronger than suggested
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