Newcomers will offset challenges to trade, says agent

The pub sector will survive the challenges of licensing and smoking as newcomers continue to come into the pub market, according to Colin Wellstead, director of pubs and restaurants at Christie & Co.

He said that in recent years the pub sector has been a strong buyers' market, enjoying healthy increases in values as demand has continued to outstrip supply. But as the growth in residential house prices has slowed, consumers have started to tighten their purse strings and vendors' aspirations were too high.

Despite this, the market is still being driven by the shortage of freehouses and pub companies looking to expand, he argued. The on-going cycle of pub groups buying rival operators and individual pubs is resulting in the churning of estates.

Christie & Co believe this provides the opportunity for buyers to get their hands on unwanted pubs and turn them into successful, independently-run operations.

This churn will continue as successful pubs that have been developed by the individual entrepreneurial operator are sought after by pub groups who want to buy them to improve the quality of their estates.

Mr Wellstead added: "The trend is currently demonstrated with the marketing for sale of 100 pubs on behalf of Enterprise Inns, of 57 outlets for Admiral Taverns and for 57 for Pubfolio. Most of these pubs are freehold businesses. Leasehold businesses are also increasingly in demand by purchasers frustrated by the shortage of freehouses, although banks are more circumspect when it comes to funding leasehold purchases."

• The latest statistics from Fleurets reveal that the freehouse freehold market is diminishing as pubcos have been strong buyers over the past three years, and the supply of sellers has stopped.