Diary of an agent: Richard Watson and James Barton

Richard Watson (pictured left) is head of auctions at Knight Frank and James Barton (pictured right) handles land acquisition and disposals as part of the City and East Residential Development team.

How has the pandemic affected your part of the business?

Richard Watson (RW) - The decision to sell through auction is about having control of the process. You dictate the timing and the contract terms. The only thing you don’t control is the price, which is set by the market. This, and the ability to deliver the auction process efficiently online, has made it a popular option during the period.

James Barton (JB) - House builders and regional developers are our bread and butter and we’ve had a good year, as they’ve been able to continue working after the first lockdown. While the homebuilders and developers stepped back initially, cash rich UK-based investors came into the market looking for opportunities plugging the gap. By last autumn everyone was back in the market.

What impact has the latest lockdown had?

RW - We held our first official auction last September and our next will be on 31 March. An auction’s strength is the certainty it provides in uncertain times. All the legal groundwork is done ahead of the day, there are virtual tours and floor plans available to interested parties, and the due diligence is complete before the event.

JB - We have just picked up five new instructions and will bring them all to market by late February. While the time leading up to Easter and then September/October is typically busy in residential development, it’s unusual to have this many instructions at this point. Ultimately, people want to sell their sites and there are buyers out there.

What else can the auction route offer clients at this time?

RW - We recently sold a two-bedroom flat in Mayfair located next to Crossrail. It initially attracted strong interest through our Mayfair residential office as it looked affordable. This didn’t translate into a deal, as it was a 13-year leasehold with no option to extend. Through auction we were able to make the case that the sale price could instead be viewed as a very competitive annual rent over the period. This was difficult to do in a busy sales market but proved very attractive at auction to those looking for a London stopover, as well as parents after somewhere for their son or daughter.

How are market conditions affecting demand?

RW - At our December auction it was flats without outdoor space that didn’t sell. However, on the flipside a flat in London’s Clapham with outdoor space situated opposite the common was snapped up. A maisonette with a garden and external office went for well above the guide price, too.

JB - Last March people were waiting for distressed sales, but they never materialised as the banks chose to work with developers, unlike in 2008/09. That helped a lot and sentiment ahead of the latest lockdown was good. While we’ve seen a little disruption due to the latest restrictions, sites are still being put on the market.

What effect has the pandemic had on pricing?

JB – The price of land has been stable throughout. This has been, in part, due to the lack of quality developments available before the pandemic, which means supply remains restricted. Climbing house prices during the past year have also supported land prices.

Is there any hesitancy in the residential development market?

JB – Private clients are tending to hold on to their sites at this moment. They may have had it in the family for years and they don’t want to sell it during lockdown. However, if you’re a developer with consent for a site then you’ll sell as you appreciate that housebuilders are low on stock and starting to pay more for sites. With institutional investors it depends on the fund and whether it is cash rich or needs topping up.