The increase in sale price is largely because the majority of unviable pubs have been sold, the quality of assets has improved and banks are more willing to lend, according to the company’s Business Outlook 2015 report, which calculates statistical changes derived from pub transactions brokered by the firm.
Christie + Co director and head of pubs Neil Morgan said this has made for a “leaner, fitter and more sustainable” industry.
While nationally the average sale price for freehold and leasehold pubs rose by 8.6%, in 2014 compared to 2013, the sale price in London soared by 29%. Prices increased by 9% in the South West, 15% in the South East and 2% “north of Milton Keynes”.
In 2013 the average sale price for freehold and leasehold pubs went up by 3.3% - the first increase since 2007.
Regarding alternative use, 80% of pubs sold by the company in 2014 stayed as pubs, a 13 percentage point rise compared to 2013.
Speaking exclusively to the Publican’s Morning Advertiser, Christie + Co director Simon Chaplin said the figures “fly in the face” of organisations that claim the UK is continuing to lose pubs and shows assets of community value are “an irritant but not a problem” when it comes to selling sites.
“The number of licensed premises is not that different to 20 years ago,” he said. “Despite what the Campaign for Real Ale says, a lot of pubs are remaining as pubs or otherwise reopening as a restaurant or other licensed premises. Only around 2% are turned into convenience stores – it is hardly a huge number that would pose a threat to the pub industry.”
He added that there are currently around 50,000 pubs in the UK, which is “the right sort of number”, but the market-rent-only option in the pubs code could lead this to fall to a lowest estimate of 45,000.
“If pub companies are not willing to invest due to MRO, then there will be fewer entrepreneurial types attracted to leaseholds,” he added.
The agent added that the freehouse market has steadily grown over the last few years as pub companies released assets back into the market to pay debt. Chaplin said he expects the number of privately-owned freehouses – currently at 20,000 – to overtake the number of tenanted and leased pubs by the end of 2015.
He said managed houses also continue to be in big demand and short supply, which is prompting pub companies to transfer suitably large assets from their leased and tenanted estates.
Looking ahead, he said he expects there to be further managed and tenanted package sales, more private equity deals and potential opportunities for small operators if there are disposals following the M&B/Orchid and Greene King/Spirit deals.