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Fewer bottom-end pubs sold for alternative use

By John Harrington , 10-Jan-2013

Fewer bottom-end pubs sold for alternative use

Fewer than half (48%) of all bottom-end freehold pubs sold in the year to 30 September went for alternative use - six percentage points fewer than last year - and the slowdown in conversion rates is expected to continue, according to Fleurets.

New figures from the property agent show that a higher proportion of pubs sold for alternative use ended up as residential property - 54%, against 47% - last year. Significantly fewer were converted to retail premises; the proportion fell from 26% to 14%.
More became restaurants (up from 10% to 14%) or convenience stores (2% to 4%), while fewer were due for conversion to office space - down from 7% to 4%. Three percent were sold for conversion to cafes, while the remaining 2% included conversions to funeral homes, bed and breakfast accommodation, takeaways, storage space and vets.
The average sale price for pubs sold for conversion increased 29%, against a 6% rise for outlets that are set to remain as pubs. The average sale price for a conversion to non-pub use was 16% higher than for those that remain as pubs.
There proportion sold for alternative use was the same in the north as in the south, although 58% of the total number sold for alternative use were in the north.
Fleurets said it sold one third fewer bottom end freeholds in the year, although this still accounts for two thirds of all freehold pub transactions in the period. Sales prices ranged from £34,000 to £1.15m and 35% of pubs sold for alternative use were at £150,000 or below.
Simon Hall, director and head of pubs at Fleurets, said: “We have started to see a slow down of the conversion of public houses to alternative uses. We expect this to continue in the year ahead as better quality, more viable pubs come to the market.
“The growth in the average sale price of pubs for non-pub use was significantly higher than the growth in sale price for continued pub use. This suggests the wider property market is seeing greater increases in value than the pub property market.
“Nationally there is a 16% differential between the average sale price for non-pub use and continued pub use, whereas last year sale prices for pub use and non-pub use were much the same. There is a distinct difference between the north +5% for non-pub use and the south +28% for non-pub use.
“Over the last three years residential conversion/development has been the most common use for pubs that are sold for alternative uses. Half of all pubs sold out of the trade have been converted to housing and the majority have been for single dwelling conversion.
“Restaurant and retail uses have continued to be the second and third most popular end uses, consistently averaging between 10–15% of all alternative use sales.
“Despite common perception that convenience stores and care homes are taking over large numbers of public houses, the actual numbers are relatively low and consistently around the 2–4% of all sales for non-pub use. When they do happen, however, sale prices can be significant.”

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