Pam Golding Commercial said last week that it had launched Pam Golding Commercial Auctions to "cater for this highly effective and increasingly popular means of selling commercial investment property in a short period of time and at a market-related price".

Peter Golding, CE of Pam Golding Commercial, says the current trend, which emanates from Australia, is the multiple auction where a number of properties are auctioned at a central venue. He says this method has shown "unprecedented success" in SA in recent months as it brings together all interested buyers at the same time.

Auction groups, in particular Auction Alliance, have been the trailblazers in this method of disposing of commercial property.

Paddy Smuts, who heads Pam Golding Commercial Auctions, is confident the division will hold its own against the auction houses.

"Pam Golding Commercial has a lot of clients…. The stigma of auctions being associated with liquidations and bankruptcy has fallen away and people recognise it is a quick means of disposal," he says.

"From our network of thousands of agents … we feel we can acquire stock, which is the whole key to the business, and it is stock that will be exciting to our investors.

"In an auction the seller pays for advertising. They know their money will be well spent as Pam Golding is a very well-known brand.

"We are also trying to train the seller to realise that the auction means of disposal should become the first method of disposal."

Frank Reardon, MD of online commercial property marketplace eProp, which also recently launched an online commercial property auction service, believes auctions are becoming more popular because of the aggressive marketing and re-educating of people by leading auctioneers. Reardon says auctioneers are trying to change the perception that auctions are used only when a "building or its owner is in distress".

Rael Levitt, CE of Asset Alliance, the holding company of Auction Alliance, says smaller private investors are increasingly shifting from residential to commercial property.

"The buy-to-let investor has realised that as an investment class, residential property currently offers weak rental yields while commercial property offers not only capital appreciation but also strong returns."

Levitt says the emergence of commercial property auctions is an indication of the strong growth in this sector and, with several established property companies, including Pace and Pam Golding, recently launching auction divisions, there is no doubt they are capturing a significant slice of the broker market.

"We are seeing a huge number of private investors flocking to our commercial auctions in Johannesburg, Pretoria, Durban, Cape Town and Bloemfontein," says Levitt.

"We launched multiple auctions in Western Cape in 2001 and are exuberant that the concept has taken off … with more than R2bn of real estate coming under various auctioneers gavels over the past year."

He says investors of up to R10m, who invest in smaller shopping centres, office blocks and industrial property, are a new buying class — often black entrants to the market — and enjoy the transparent auction environment.

"These buyers are fuelling prices and outbid traditional investors."