Friday, January 16, 2009

The average value of a pub plummeted by 11.69% in 2008 as the sector struggled to cope with an onslaught of regulation and the economic downturn, according to Christie + Co.

Average pub value fell 11.69%

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Freehold prices held better than leasehold prices, with significant premiums proving hard to achieve, said Christie + Co.

It said that operators who had started to come to terms with the effects of the smoking ban and the bad weather experienced in 2007, found themselves hit with rising utility costs, food inflation, an increase in alcohol duty, and a squeeze on consumer spending.

“Good quality freehold assets continue to generate interest, while enthusiasm for properties that are being converted from managed to leased remains strong," said Christie + Co head of pubs Neil Morgan.

"Moves by the major pub companies to curtail their acquisition plans have allowed independent buyers to come back into the market. Regional brewers are also expected to take advantage of the lack of competition from major chains, to increase their freehold estates.

“Appetite for medium-sized packages remains but, until debt and credit markets reopen, there is little likelihood of a return to the frenetic mergers and acquisition activity, which has characterised the sector over the last decade.”


In 2008, pubs were said to be closing at the rate of five a week while a number of operators also entered administration.

“While the rate of pubs shutting may seem alarming, such closures have been taking place across the sector for many years and are usually due to the fact that a site is no longer viable, or that it has a higher alternative use value," said Morgan.

"As long ago as 1999, Christie + Co predicted that there were too many pubs operating in the UK, with 10,000 needing to close.

“The first half of 2009 is expected to be equally tough for the sector and we are already starting to see some tactical price reductions on products, as companies try to improve trading. However, we remain confident that good quality, well run pubs have a long-term future both as trading entities and as investments.”

Distressed assets

Chris Day, international managing director at Christie + Co, added: “Most businesses enter 2009 with concerns about future trading and the impact current economic difficulties will have on their performance. At whatever level a business is trading we believe that service delivery and customer care will ensure that the business stands the best chance of success.

“Increasingly we are seeing buyers looking to acquire businesses to achieve much higher returns on their cash than can currently be achieved almost anywhere else.

“Unfortunately there will be 'distressed' opportunities, as the market readjusts to a more normalised financing climate and values reflect the more cautious approach of lower leveraged investors.”

RE: Pub values down 11.69%

Not according to Enterprise?

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Inez Ward 16/01/2009 09:50:34

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RE: Pub values down 11.69%

Didn't they announce a raise of circa 1% in the valuation of their estates?

This post replies to info man > RE: Pub values down 11.69%

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J Mark Dodds 16/01/2009 10:05:36

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RE: Pub values down 11.69%


PWCunch and Ebtdaterprise property values are cocooned from the real world because they are P U B C O S or Castles In The Sky as Don McLean might have put it. Their properties have ADDED VALUE and rise in a sinking market.

There. Hope that answers your doubts.

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