Pubco cast-offs creating surge in interest, say property agents

Research suggests more wannabe licensees - as well as experienced operators - are showing an interest in buying pubs, thanks in part to the current off-loading of sites by large operators.

Neil Morgan, head of pubs at property agent Christie + Co, said corporate disposals were creating large peaks in activity.

"Interest in the pubco sites we are offering for sale continues to exceed our expectations," said Morgan.

"Our marketing intelligence shows that the number of potential buyers almost doubles when corporate disposal programmes are launched, with large peaks in website registrations and viewing activity."

Morgan said that average pub prices had fallen by 20 per cent in 2009 and by 29 per cent from the peak of the market in 2007.

"The declines were exacerbated by the high volume of "bottom end" pubs individually transacted during this period," he said. "During 2009, some pubs saw price declines of less than 10 per cent, where trade and management were in great shape and the pub enjoyed a sought after location."

Morgan argued that that recent increases in activity and enquiries meant average property prices were stabilising, across both high-quality freehold units and lower-quartile disposals.

"There is evidence to suggest that prices of lower quality sites are also stabilising, as they attract interest from proven managers and operators who are seeking freehold sites. We are confident that the robust prices we are likely to achieve in 2010 will be reflected in valuations moving forward."

Meanwhile Birmingham-based mortgage broker Crystal Commercial Funding, (CCF) claims to have a received a "surge" of interest from pub tenants looking to get into the freehold market.

David Parke, CCF's director of operations, said he was seeing a return to the levels of business witnessed before the recession.

"We put the renewed interest down to the willingness of landlords to look at the independent freehold route," he said.

Another factor was large pubcos selling pubs at more realistic prices to new entrants as well as experienced operators.

"Many experienced publicans are seeking to acquire either larger or additional pubs and have historic accounts.

"But even if no track record is available, there are now lenders who are willing to consider applications based on the strength of the business plan," Parke added.