Food for thought for US company after modest success in second auction
Attendees at last year’s Expo Real commercial property exhibition were treated to a veritable marketing-fest by new arrival on the German scene, the US online property auction specialist auction.com. The enormous (at least for the European real estate industry) fanfare was followed shortly thereafter by the company’s first online German auction, on which we reported in REFIRE at the time.
Following a hiatus of several months, the company has just completed its second auction of German commercial property at the end of June. The online event lasted three days, during which 31 properties were offered on behalf of nine institutional sellers. The properties included office, retail and logistics assets.
According to Ken Rivkin, auction.com’s US-based managing director in a statement, the company was ‘pleased’ with the results of the second auction. “Bidder registration and auction bidding activity both increased by over 20% compared to our first event in December, which highlights the increasing interest in our transaction model. We remain confident that Europe is ready to accept our innovative and transparent marketplace.”
The properties in the June auction had a combined value of more than $98 million (€75M) and were located across Germany, with a focus on North Rhine-Westphalia, Hesse, and Saxony. Starting bids ranged from $130,000 (€100,000) to $4.6 million (€3.5M), and included office, supermarket, retail, and distribution sectors. The highest bid in the auction was $6.7 million (€5.1M), although the company was being coy as to how much overall revenue was generated from the sales.
“In line with our first auction, most of the asset-specific interest was from local investors and regional developers; however our geographical reach was broader in June,” said Rivkin. “Most of the registered site visits and bidders were from Germany, but we also had investor activity from the UK, Italy, France, the Netherlands, Switzerland as well as the United States.”
Auction.com also said that it had so far had 79,180 overall website visits, a total of 71,705 unique visitors, and 396 NDA’s signed.
Rivkin added that Auction.com was planning to extend its offering with broader asset classes by conducting back-to-back residential (multi-family) and commercial auctions in November, with a new marketing campaign kicking off in September.
“We fully expect the trend of increased bidding activity to continue in our upcoming auctions as more market participants recognize the efficiency and effectiveness of our unique platform. We will increase our auction frequency to the point of having several a month in the long term as we become a major source of investment opportunities for German real estate sellers and buyers.”
REFIRE: Reading between the lines, it certainly does seem as if the European - and particularly the German – mentality will have given the bosses at Auction.com plenty of food for thought. As the leading online property auction business in the US, the owners might have expected a warmer welcome on European soil, where after all buyers could be expected to be just as keen on snapping up bargains as across the pond…
With only about one in four assets being offered finding a buyer, it looks like there’s more work to be done by auction.com before the next pair of auctions coming up in November. Like all good ideas, of course, whose time may have come, the competition doesn’t sleep. There is now new competition on the German market this year in the shape of propertybid.de, a subsidiary of well-established Auktion & Markt AG, a specialist in second-hand car sales which is now using its auctioning know-how to reach out to new markets.