London pub market remains highly competitive

Provincial pub operators looking to get a foothold in London in the run-up to next year's Olympics were warned by a leading agent not to expect any bargains.

A number of regional brewers are believed to be eyeing the capital as a potential hunting ground, with its economy seemingly resistant to the worst effects of the economic downturn and the lure of 2012 an added attraction.

But Neil Morgan, head of pubs at agents at Christie + Co, said freehold opportunities were thin on the ground and where sites were available they were commanding high prices.

London's tourist trade was a fantastic opportunity for pubs in the heart of the capital, Morgan said, as was the city's eating-out market.

But opportunities to gain access to these would be hard to come by, he added.

"If you've a successful site in the central part of London, the area a mile's radius from Trafalgar Square we call the 'hotspot', then the chances are you can command a very high multiple, in between 10 and 15 times earnings before interest, tax, depreciation and amortisation (EBITDA)," Morgan said.

"And the thing is, if you own a successful pub in London, and it's trading really well, why would you want to sell it?"

On the leased side, there were opportunities with property-led landlords such as Cadogan or the Grosvenor Estate, Morgan believed, but the tied nature of many of the leases available in London would make a move by a regional brewer less attractive.

"Overall it's a case of demand currently outstripping supply," he added.