However, closures are expected in the new year to some extent as cost rises such as the end of VAT relief, living wage changes, inflation, the end of rent moratoria and staff shortages take effect.
Simon Hall, Fleurets director – head of agency north, said there had been a “strong level of demand across the country for operational businesses and development sites set against a supply shortage of available opportunities to purchase”.
He explained unlike the fast-casual restaurant market that saw some of larger players restructure their often highly geared leasehold estates and shed underperforming units, the pub sector has experienced very little ‘churn’, as the major groups benefit from predominantly freehold ownership and have been able to take a longer term view and stuck with what they have.
Demand across all areas
“High levels of demand for all manner of pub assets have been experienced across all regions,” Hall said. The average freehold pub price is almost £460,000, which is an increase of 20.3% on the second half of 2020.
Fleurets classes pub properties into three categories: freehold freehouses, bottom-end freeholds and leaseholds.
The average sale price of freehold freehouses, which are usually better quality pubs sold with accounts and operational businesses, increased by 9.5% to about £620,000 compared to the first six months of the pandemic when properties were selling for circa £560,000. Some 71% of these sites are being sold to continue in their existing use as pubs.
Bottom-end freeholds – often sold without accounts and may be closed or vandalised, or, if operational, are on a temporary arrangement – have risen in average price to about £320,000, which represented a 7.2% increase from the halfway point of 2020 and a 5.7% uplift from the start of 2020. Only 47% of these sites were sold for existing use.
Leasehold values fall despite more transactions
Meanwhile, leaseholds that are usually free of tie or tied on assignment, letting and underletting, dropped in average sale price to about £24,000 in 2021 – a fall of 21.3% from the midway point of 2020. This trend was partly due to an increase in the number of lettings to 83% (was 69%) as opposed to leasehold sales, as more properties became vacant and were re-let on nil premium deals with incentives. The volume of leasehold transactions overall increased 35%.
On pub closures, the Survey of Pub Prices 2021 report stated British Beer & Pub Association statistics that said the number of pubs in the UK was just shy of 70,000 in 1980 and has fallen consistently, bar a slight boom in the late 1990s, to a figure of circa 46,000 now.
However, data shows it is the number of small pubs with fewer than 10 staff that have seen the most closures while medium-sized (10 to 24 staff) and large pubs (25-plus staff) have increased.
From 2009 to 2019, pub numbers went down by 17% but the number of people employed rose by 9% – driven by an uplift of staff at large pubs by 69% during the 10-year period.
Major portfolio transactions 2021
No of units
Punch Pubs & Co (Patron Capital Partners)
Fortress Investment Group
Pie & Pint
Boom Battle Bars
Urban Pubs & Bars
St Arnold Pubco
Hall & Woodhouse
Little Britain Pubco
Coaching Inn Group
Inglenook Inns & Taverns
Wells & Co