South West property analysis

The South West has always been much sought after by people looking to relocate from other areas of the UK. Of course there's the coast and the countryside for which the region is rightly famous. But it is the quality, pace of life and the lifestyle that living in this part of the country can bring that really attracts people to settle here.

So, despite the current climate, pubs in the South West remain a good option for anyone looking to run their own pub. The diversity of the area means that there is usually a pub to suit most individual requirements. In the current market especially, these opportunities have become more affordable.

Property prices have undoubtedly fallen in the South West, with drops of anything between 10 per cent and 15 per cent in freehold prices being widely reported.

Leasehold values have also been affected and in our opinion only exceptional leasehold opportunities are now worth more than £100,000, with a figure of between one-and-a-half to two times profits being a good guide as to price.

Stonesmith typically offers between 40 and 50 pubs for sale at any one time, specifically in Devon, Cornwall, Somerset and Dorset. A year ago, we were probably selling one leasehold pub for every three freehold pubs, however in the past six months, these figures have been totally reversed.

Historically, it has been the market for country and village freehouses that has seen the most demand. This has been especially so for those with a sea or riverside location. Quality, high-turnover, freehold public houses are still in demand, albeit that there are fewer buyers around than there were a year ago.

Demand at the moment is very much focused on pubs being converted from managed to leasehold opportunities. We have also seen an emerging market for privately owned freehold pubs being converted into free-of-tie leasehold opportunities. Both of which can be put down to the global problems in the financial markets and the general tougher conditions in the property market.

Yet we do continue to receive enquiries from private individuals looking to run their own pub business, from first-time buyers through to experienced regional operators. The biggest change in the pub market in the past six months is that the pubcos have put all new individual acquisitions on hold, leaving the best opportunities for private operators.

In season​

It's perhaps no surprise that the spring and summer months are traditionally when we get most of our enquiries. So far this year, we see this still being the case.

Trading conditions remain tough and without a doubt the lack of available funds is stalling the pub market. We continue to get good levels of enquiries from potential buyers. However, with the lower levels of borrowing that are currently available, deals are being delayed and in some cases are un-fundable.

There are indeed still buyers in the market just waiting to find the right business. However, currently no-one is rushing in to making any life changing decision without doing all their homework thoroughly first.

Mike Phillips is a director at Exeter-based agent Stonesmith​.