Fleurets reveals 21.6% decline in leasehold transactions

By Stuart Stone

- Last updated on GMT

Price survey: leisure property specialist Fleurets has revealed the average freehold sale price increased by 6.9% in 2018
Price survey: leisure property specialist Fleurets has revealed the average freehold sale price increased by 6.9% in 2018
A survey by leisure property specialist Fleurets has revealed the leasehold market “continued to be difficult” in 2018 as volume and value of acquired leaseholds plummeted.

Fleurets’ Survey of Pub Prices 2018 also revealed that the average freehold sale price increased by 6.9% in 2018, climbing from £416,624 to £445,537 over the past 12 months, with the average sale price of all bottom-end freeholds – properties generally sold without accounts, sometimes closed or vandalised or, if operational, under temporary arrangement – up 1.9%.

The report outlined increased demand for high-quality sites suitable for managed operation, city centre venues, bottom-end freeholds, leisure investments, nil premium free-of-tie leaseholds and package deals.

Conversely, the survey found that demand for mid-sized, often owner-operated businesses, and leasehold assignments at a premium had declined.

All statistics included in Fleurets’ survey have been taken from detailed analysis of transactions completed by Fleurets, where first-hand information was available. It does not purport to reflect all market transactions.

All freehold average

Difficult year for leaseholds

Fleurets’ survey highlights that the leasehold market has “continued to be difficult” over the past year with the volume of transactions down by almost 22% – reflecting both a lack of confidence and a reduction in the availability of viable opportunities according to the leisure property specialist.

The average sale price of leasehold pubs decreased by 27% in 2018, according to Fleurets, which attributed the decline to fewer premium assignments taking place – evidenced by the average fair maintainable trade of acquired leaseholds falling by 13%.

Leasehold pubs

North-south divide in freehold freehouses

Across all regions, the average sale price of a freehold freehouse took a 5% hit in 2018, falling to £675,964.

“This reflects a significant change in the location of transactions, with more in the north and fewer in the south; not an inherent value change,” the report explained.

In the south and west regions, sale prices increased between 5-10%, while prices in the east increased by 60%. However, the overall average sale price in the south fell by 5% in light of fewer freehold freehouse deals taking place in London at capital prices.

Moreover, while average sale prices in the north of England increased by 64%, Fleurets qualify that this was “heavily influenced” by the transaction of a managed house portfolio. According to findings, the average sale price excluding said transaction increased by 40%.

Bottom-end freeholds

While the average sale price of all bottom-end freeholds increased by 1.9%, “partly as a result of a marginal increase in fair maintainable trade of 0.7%” according to Fleurets, the volume of bottom-end sales decreased by 19% – a fall of 7% in the north and 37% in the south.

The report explained: “Many pubcos retained and invested in underperforming assets, rather than sell them, and administration sales of individual freehold pubs remained low as trade levels held up and debt holders continued to support operators.

“This would also suggest we are nearing the end of the big pubcos’ disposals programmes.”

Sold freeholds remaining as pubs

The percentage of freehold pubs that remain as pubs after being sold increased for the sixth time in seven years according to Fleurets’ latest report – now accounting for 64.5%.

According to findings, the most common alternative use for pubs was residential property – with two thirds of pubs sold for alternative use converted to residences followed by retail at 10% and convenience stores at 5%.

Pub use v alternative use 2

Forecast for 2019

Fleurets director Simon Hall summarised: “The pub market is specialist and diverse.

“There is no shortage of buyers with plenty of funds and wanting to buy, and there is no shortage of talented operators wanting to operate, but in certain sections of the market there are very few buyers who have both the money and the ability to operate.

“Values are steadily increasing and turnover in the pub sector is remaining firm, however, increasing costs and falling consumer confidence are focusing attention on bottom-line profits.

“This is encouraging a trend towards smaller wet-only concept bars with fundamentally lower overheads.”

Increase in portfolio transactions

Fleurets’ survey notes that while at the beginning of 2017 there appeared to be very little appetite for large package deals in the pub market, significant deals in summer of that year paved the way for increased package activity in 2018 and a renewed appetite for group acquisitions.

Key package transactions in 2018 included:


- Lonsdale Capital Partners acquired a majority stake in Nighlight Leisure, which trades under the name Simmons Bars.


- Brunning & Price bought Ribble Valley Inns

- NewRiver acquired Hawthorn Leisure for £106.8m


Fuller’s bought Bel & The Dragon

- Stonegate purchased Be At One and 15 leasehold sites​ from Novus Leisure


- Aprirose purchased Wear Inns for £22.4m

- Mitchells & Butlers purchased a share in 3Sixty Restaurants

- The Restaurant Group bought Food & Fuel for £14.91m​ to add to its Brunning & Price division


- The Green Belt portfolio sold for circa £19.5m to Kames Property Income Fund


- Marston’s acquired 15 freehold pubs​ from Aprirose

- NewRiver sold 22 community pubs let to Marston’s for £14.8m


- Novus Leisure sold three Tiger Tiger sites​ to Deltic


- Heineken agreed the sale of 76 community based, tenanted, mainly freehold pubs to NewRiver for a reported £12m

- Ossett Brewery sold a 50% stake​ to a private investor – including 26 retail sites.

Fleurets’ Survey of Pub Prices 2018 can be read in full here.​ 

To find out more about pubs for sale, lease and tenancy visit our property site.​ 

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