Pub values plummet by nearly 12 per cent

Pub values fell by an average of 11.69 per cent during 2008, according to property agent Christie + Co.

The figures, revealed during Christie's annual Business Outlook launch, also revealed freehold prices had suffered less of a slump than leaseholds.

Neil Morgan, head of pubs at Christie + Co, said: "Although there has been a reduction in values, compared to the heady freehold prices achieved over the past few years, we believe that they have generally held up remarkably well.

"Good quality freehold assets continue to generate interest, while enthusiasm for properties that are being converted from managed to leased remains strong."

He added that independent buyers were coming back into the market as a result of larger pub companies halting their acquisitions.

The plunge in values and the rise in the number of pubs closing their doors, has been blamed on a combination of the credit crunch, rising utility costs and the government's increase in alcohol duty, the report said.

Morgan added that the high number of pub closures experienced during 2008 had been predicted by Christie's 10 years ago when it estimated there were too many pubs operating in the UK and that 10,000 needed to shut.

Morgan said that prices were likely to continue to drop in 2009.

"The first half of 2009 is expected to be equally tough for the sector", he said, "and we are already starting to see some tactical price reductions on products, as companies try to improve trading.

"However, we remain confident that good quality, well run pubs have a long-term future both as trading entities and as investments.

Chris Day, international managing director at Christie + Co said values would continue to "reflect the more cautious approach of lower leveraged investors."