Overarching market trends included the continued shedding of underperforming sites by pub companies such as Ei Group, the reduced supply of bottom-end freehold pubs, and increased demand leading to higher prices paid for sites in city centres and higher-value towns.
- Combined Freehold sale price £416,624, +14.6%
- Freehouse sales volume down 24.1%
- Fewer but bigger portfolio deals
- Bottom-end sale price £271,998, +24.5%
- Leasehold sale price +31% to £51,980
- Leasehold volumes up 24.4%
- Growing market of private landlords
- Improving quality of disposals
Other key findings from the report included a significant increase in premiums paid for leasehold pubs. With the quantity of deals decreasing, the fact that the average sales price increased demonstrates that the quality of pub traded was on the rise last year.
Moreover, 2017 witnessed a sustained increase in freehold pubs remaining as pubs after they were sold, with 61.5% operating as pubs after sale despite rising values for a number of different uses for sites post-sale – for example, the number of pubs that became convenience stores after sale increased.
Quality over quantity
Commenting in the report about the year’s results, Simon Hall, director and head of agency at Fleurets said: “Property transactions in the pub market have shown remarkable resilience over the past year, despite political and economic uncertainty and the added burden of recent sector legislation.
“Activity and sale prices have been driven by the increased quality of transactions with higher trading levels and decentralisation leading to premium prices being paid for the best regional assets.”
Hall stated that the quality of pubs being sold was on the increase, demonstrating that the market was in good health.
Forecast for 2018
In forecasting the year ahead, Hall highlighted several trends to be aware of, namely in respect of cost inflation and the effects of continued uncertainty over Brexit. Hall explained that if a rise in prices reduces consumer disposable income, or if uncertainty leads to more cautious consumer spending plans, the result could be a reduction in on-trade sales.
On a positive note, these factors don’t appear to be affecting trade levels at present, according to Hall, who also notes that the positive impact of staycations and increased tourism in the UK from abroad were having a positive impact.
He predicts that the freehold market will remain in strong demand for centrally located properties for operation and for investment.
The full report can be viewed here.
To find out more about pubs for sale, lease and tenancy, visit our property site. http://property.morningadvertiser.co.uk/