The volume of operational freehouse pub sales has shot up by 150 per cent in the last year, whilst bottom-end pub sales are down by 28 per cent.
This is according to the annual Survey of Pub Sales carried out by leisure property specialists Fleurets. The survey revealed the stability of the pub sales market in general, which is surprising considering the political, regulatory and economic turbulence over the past twelve months.
Simon Hall, Director & Head of Agency commented: “The sales mix has moved away from bottom end pub sales, leaseholds and packages to increased volumes of freehouse deals. This has resulted in an improvement in the quality of pubs being sold and an increase in the average sale price."
The increased average sale price in the North reflects the improved quality of properties sold with fair maintainable trade (FMT) up 20%. The small increase in sale prices in the South reflects a higher proportion of sales in the west region, which are generally lower than those seen on the south coast.
London witnessed a substantial increase in pricing up 45%. One of the highest sales was an off-market deal on the Commercial at Spitalfields Market, which sold for £4.65m. Interestingly, over the past year there have been fewer package deals and fewer leasehold assignments.
Brexit has not impacted on transaction volumes either individually or in packages, as many might have expected. A number of deals were lost and attempts were made to renegotiate the odd transaction at the time of the announcement, but on the whole deals that had been agreed went through as planned. On an individual level the attraction of very low interest rates and positive trading performance has seen purchasers prepared to simply “do some business”, despite what may or may not happen in Europe.
At the corporate level, particularly for venture capital backed package deals, increased scrutiny alongside an underlying caution left some sitting back to see what happens. How long this continues remains to be seen, but deals are waiting to be done and temptation will eventually overcome caution, Trump-mania permitting.
Freehold sale prices were up modestly by nearly 5 per cent, averaging £363,543 per transaction across the UK. This contrasts with the 18 per cent drop in the average leasehold sale price to £39,801.
Negligible impact of new regulations to date
A key element of the Pubs Code that commenced on 21st July 2016 was the Market Rent Option (MRO). After several months there has yet to be seen any impact on rents, values and market activity. Surprisingly for some it has not generated a flurry of disposals by pubcos seeking to avoid the effects of the MRO by selling off the problem. Instead pubcos have innovatively managed the impact by offering new tenancies not leases, offering existing lessees attractive deals to move to new agreements, in some cases buying back leases and, of course, setting up managed divisions capable of taking pubs under their control at lease expiry.
The Year Ahead
Much depends on the world economy post-Brexit and the Trump inauguration. The only certainty at this stage is uncertainty. Nevertheless, we will remain a part of Europe, interest rates will remain low, taxation may ease
on the pub sector and performance will be resolute. Fleurets anticipate that activity will remain solid in transaction numbers and prices are likely to show more modest growth, as the increased rates burden affects the bottom line profitability for many programmes.
Client is a provider of coach-with-driver hire services based in West Yorkshire. It has traded for nearly 50 years continuously and is a well-known and respected brand among private and public sector decision makers as well as consumers and charities...
Opportunity to acquire a successful temporary employment agency that specialises in healthcare workforce solutions. Establishing the business in 2013, our clients have over 25 years of experience in recruitment services and this experience has helped...
A leading hair extension salon, which has established itself as the nation’s preferred choice for a wide variety of hair extension products. The business operates from an ideal location in a high footfall area, with its salon being refurbished to a v...
Please choose your settings for this site below. For more information please read our Cookie Policy
These cookies are necessary for our website to function properly and provide you with access to all features.
These are analytics cookies that help us to improve the way our website works.
These are used to improve the functional performance of the website and make it easier for you to use.