Worst fears over ban not realised

There sis no end of speculation surrounding the perceived impact of the smoking ban on the licensed trade in Scotland. Speculation not only surrounding takings - but on the value of the sector's property portfolio.

Anecdotal evidence even suggests price reductions have been sought occasionally on the selling price of licensed premises, as compensation for the anticipated loss in earnings in the wake of the ban.

However, such moves have been vigorously resisted - and rightly so.

Significant change will always attract its share of optimists and pessimists - and, despite the harbingers of doom, a full year is needed before we can draw any informed conclusions.

While it may cause no major hardship to nip outside for a puff on a warm, balmy evening in what was an unusually prolonged summer, outdoors tends to lose its appeal when a gale is blowing and the mercury has plunged to the thermometer's depths.

But early indications suggest the worst fears of the licensed trade have not been realised since the smoking ban was introduced.

This is underscored by the latest upbeat results, issued at the end of November by Mitchells & Butlers (M&B). With strong growth of 15 per cent in earnings being recorded, the chain's chief executive, Tim Clarke, claimed high-quality amenities and good-value food and drink have been the recipe for generating sustained sales growth.

M&B's experiences highlight the opportunities which the smoking ban has created to target a new clientele.

But it would be wrong to suggest these changes have had absolutely no effect on the market for pub properties - this is a trade-driven market and, for a small minority, trade has been affected.

Some buyers are showing just a little concern for certain locations and some styles of premises.

However, any effect the ban has had on property prices is practically immeasurable - particularly against the background of many other factors which contribute to a buyer's decision.

A poorly performing pub might sell for less than it would have two years ago, but its main problem may well still be that it is old, grotty and unpopular. Or perhaps the buyer recognises the premises could be more valuable as a convenience store or other retail use.

This interpretation of the trends is reinforced by experiences at the other extreme, where some pubs are selling very well. These typically offer outside shelters for smokers, good food, and their owners know how to exploit their particular market.

Overall, there has been a steady growth in prices during the past 12 to 18 months, mainly caused by simple supply and demand: a shortage of good places to buy and a number of hungry, ambitious buyers, eager to get the high returns that a well-run pub can earn.

The growth has been reassuringly measured, stable and predictable, with no particular change expected in the next six months at least.

This is good news for the market, but those expecting to steal a bargain during wild, smoking ban-induced price fluctuations will be disappointed.

When the drink-driving legislation was introduced there was a similar furore from the licensed trade. Some premises may have gone to the wall as a result, but probably only those which did not have the attributes needed to survive in the first place. The same is true with the smoking ban.

Although the jury is still out on the full impact on property prices, those who rise to the challenge and improve their product can still see their investment grow.

Adam Lansdown is a director of Colliers Robert Barry, based in Scotland ​