Challenging times ahead for pub property market

2010 was yet another difficult year for the trade, so what does 2011 hold for the pub property market? We spoke to the agents

Matt Bettesworth, Director, Bettesworth​

"There are no obvious signs that the banks will increase their appetite for lending in 2011. However, we are expecting another busy year with leasehold transactions, although premiums have dropped considerably since the height of the market. Most of the activity will again be in the sub £50,000 premium bracket. Bettesworths is likely to be again advising freeholders to consider leasing as a viable alternative to selling."

Graham Allman, Managing director, GA-Select​

"We expect to see the leased sector forge ahead with sensibly valued low ingoing deals available within both the tied and free-of-tie sectors. Assignments will still prove a good buy where robust accounts are available and qualified valuations applied. Freeholds are expected to once more become favoured as the Government forces the banks to make investment easier where reliable accounts and experienced applicants are available."

Stephen Taylor, Managing director,Guy Simmonds​

"The economy remains fragile and uncertain. Despite these conditions, we are continuing to find an extremely high demand from people still keen to enter the licensed trade. The refreshing impact of limited funding from the banks has seen the emergence of a 'new breed' of cash purchasers at Guy Simmonds — those who are now not reliant on lenders. Long gone are the days when ridiculous potential claims would attract buyers wearing rose-tinted spectacles, together with banks desperate to fund the purchase."

Graham Timmins, Senior surveyor, Miller Commercial​

"We would predict a static year, which is a positive thing as we are not in a recessional period. The portents are that the lending institutions should have stocked up their coffers by quarter three or four and, hopefully, if one or two of them start to break rank, then the others will have to follow and we can get back to some form of lending norm. We could start to see better activity in terms of sales in the later part of the year."

Neil Morgan, Head of pubs, Christie+Co​

"Competition for managed sites will continue to re-main strong and we will see further disposals from the major pubcos. While we did not witness a flood of distressed cases in 2010, we expect to see further administration cases this year as businesses struggle to cope with the increased pressure on margins. Banks will increasingly play an important role across the sector and will look to consolidate their assets. With prices at the bottom of the curve, regional and local operators, plus entrepreneurs, will remain in the best position to benefit from acquisition opportunities as they arise."

Tom Nichols, Managing Director, Everard Cole​

"We anticipate many of the leased and tenanted pub companies and brewers will continue with disposal programmes, perhaps on a more selective basis. With most banks overexposed to the UK and Ireland property markets, we expect the obstacles to funding to be as restrictive as they were in 2010 and the big-gest barrier to prospective buyers. Therefore, we don't foresee any dramatic leap in property values over the coming year."

Barry Gillham, Chairman, Fleurets​

"Recent press reports say that domestic mortgages will be at their lowest numbers ever in 2011. People need to sell their house in order to buy a pub. Pub mortgages rank lower in the scale than house mortgages, so on the face of it there can be no improvement. But some licensees will decide they can wait no longer to retire. Some budding entrepreneurs will be made redundant from paid employment. We may not have closed all the UK's unviable pubs, but what is left, and what will be on the market in 2011, is a lot better than what was sold between 2008 and 2010."

Paul Tallentyre, Head of Pubs, Davis Coffer Lyons​

"It's going to be a very challenging market. But I think it's all about concepts and service. Licensees need to ensure service is consistent and at a good level so people keep going back. It will also be interesting to see new concepts come onto the market. The bigger pubcos are still buying and saying they want to push on and buy more. A large number of the tail-end pubs, the boarded up ones, will stay around for quite some time."

Robin Mence, Managing Director, Sidney Phillips​

"We expect a further in-crease in the number of transactions as sellers of all descriptions appear to have more conservative expectations of the value of the pubs they are looking to dispose of. It will be interesting to see whether there is any improvement in the lease transfer market, which was dormant in 2010. We expect to see a steady and gradual improvement during 2011, but this will depend on the willingness of the banks to be more active in the commercial mortgage market."

Sally Szymanska, Associate Director, Humberstones​

"The market is still being flooded with closed-down, boarded-up or temporary managed pubs, and this is having an effect on the overall position. It will stay, at least for the first part of the year, as it is, with more pubs closing and prices not increasing for a little time to come. On the up side, we have purchasers still looking for a bargain, many who have been made redundant and are looking to buy a way of life rather than a job."

Timothy Meek, Director, James A Baker​

"I can see more pubs that have been hanging on by their fingernails giving up the ghost this year. Gastropubs appear to be thriving, but not everybody can or wants to run a food-led operation. It is the lonely rural pub insufficiently supported by its locals that will suffer most heavily. There will continue to be a steady trickle of poor-performing outlets appearing on the market. But the interesting thing is that I can also see an increase in high-end sales occurring, particularly to acquisitive managed house operators."

Neville Herbert, Senior Valuer, UK Pub Sales​

"Last year saw an increase in popularity with buyers of the private free-of-tie lease, due to uncertainty in the property market. This led to reduced freehold sales and increasingly disproportional rents from pub companies devaluing leasehold opportunities. We expect 2011 to continue this trend, with owners who acquired freehold pubs at the peak of the market having no option but to offer a lease or take a significant hit on their asset."

Simon Hallwood and John Duncalfe, Howard Day Associates​

"Alternative use has been a strong avenue for disposal but as trading improves more pubs will hopefully be sold as pubs. It will be interesting to see if the Government's backing of communities will actually mean that they can save a pub before it is sold for another use. There is renewed interest in rural outlets where landlords are flexible on rent. One frustrating aspect, however, is the length of time it takes for transactions to complete."

Gavin Sherman - Paramount Properties​

"A drastic increase in pub sales across the UK in recent years has caused scarcity. This has had a beneficial effect on the surviving outlets and the potential for new openings in 2011 will grow further. Consumers' choices have become limited and this has created a much healthier sector."