Sun yearn

A life behind a bar in sunny Spain may be the dream of many running pubs in chilly Britain, but as Tony Halstead discovers, it can lead to heartache if it's not approached in the right way

Investing in a bar or restaurant outside the UK is a business transaction fraught with complexity. Attempt to buy a foreign property without the requisite professional advice and you are asking for trouble.

Even so, thousands of Britons have taken the plunge and opted for the good life in the sunshine over the past 30 years or so. And the result has been that those who have not approached the job in the correct way have seen their dream in the sun turn into disaster.

The fact of the matter is that those delving into a deal on the Spanish Costas or the Portuguese Algarve ­ where the majority of Brits aspire to run bars ­ are faced with an international property maze of different rules and regulations, many of them far removed from those encountered with a purchase or lease deal at home.

So, acquiring the services of a foreign lawyer is a virtual must if some of the nastiest pitfalls are to be avoided.

But would-be sun-seekers do not just need legal advice on the conveyancing of the contract. They also need help in overcoming the countless other problems thrown up by the "foreign equation".

Thorough knowledge of the locality of a target property is essential for any purchaser and here it is often only local expertise that can help.

If the issue of location is always at the forefront of any decision to acquire a pub or bar in the UK, it is an even bigger one on the Continent.

A thorough appraisal of the location of a property and minute examination of its trading potential is paramount.

A bar that appears to be set in a busy tourist location may actually turn out to be a white elephant if it is not on the main circuit or if it is outside the major axis of a new development.

Seasonal trading patterns are also a key element in assessing the potential of a business. Many holiday resorts, particularly those in the Spanish Balearic islands, close down at the end of the summer season. And business in May and October, the beginning and end of the main trading period, is often slow.

So, potential expats have to ask themselves: can a small bar or restaurant provide the business and the necessary income for an operator if it only opens its doors six months a year?

On the Spanish mainland, however, life is different, with many resorts trading a full 12 months. Spanish cities such as Madrid, Valencia and Barcelona, are guaranteed vibrant visitor levels all year round and, of course, are exceptionally busy places in their own right. British bar and restaurant operators are less numerous here, but numbers have increased in recent years.

Clara Lapedra, from the Barcelona office of valuers and agents Christie & Co, says the Spanish restaurant market is on a roll.

"The restaurant market in Spain is one of the most dynamic in the Continent, but there is a difference between corporate clients and private individual requirements," she explains.

"Corporate clients mainly look for shopping malls, proximity to cinemas and prominent façades, whereas private individuals tend to set their preferences on a low rent, long-term lease and well-maintained premises," she says.

"Evidence of the growing restaurant industry in Spain is that, last year, activity for corporate clients increased from ¤3.4m, to ¤3.7m. The number of corporate restaurants also grew, from 6,702 to 7,218," she reveals.

"The fact that in Spain, it is very hard to obtain a trading licence makes it difficult for anyone who wants to open a new business, especially in big cities, where the authorities have currently made the decision to stop issuing any more licences.

"In Barcelona, where Christie & Co mainly focuses its activity, we have been noticing an increase of foreign purchasers from the Continent or further afield," she adds.

"The positioning of Barcelona as one of the premier city tourist destinations ­ mainly due to increasing low-cost air travel ­ makes it appealing for any sort of food offering.

"This is increasing the timescale for vendors to sell their leasehold rights through a traspaso, which is the premium that the purchaser has to pay for the licence and the leasehold agreement, in which to run the business.

"Many of the traditional, well-known restaurants that have been trading for the last 50 years are changing hands at present.

"Many purchasers continue to look for the right premises, with an average timescale of a nine-month search. This is mainly due to the fact that they do not want to take any risks acquiring the business, since the average length for any lease in the city is from 10 to 15 years, whenever there is a traspaso in place and a new leasehold agreement that has to be signed.

"Our corporate activity is also increasing to nearly 30% of our overall activity in the city. For example, one of the main corporate chains in Spain, Comess Group, has recently taken on the leasehold for Pasta City, located in a shopping mall in Barcelona.

"For 2005, we expect to see a continuing buoyant market in Barcelona and Spain," she concludes.