Pub property market to ‘ramp up’ this year
The hospitality property dealer has launched its Pubs & Restaurants: 2022 Mid-Year Review, which also stated the sector has enjoyed a strong return to trading during the first half of 2022 that has helped drive investor interest in both pubs and restaurants.
However, it said the transactional market has become polarised, with demand for assets at the premium and value end of the spectrum and fewer opportunities in the mid-market.
Freehold assets remain most attractive, although there is still good demand for free-of-tie leasehold sites in prime locations. Premium pubs with outside space and accommodation remain high on buyers’ wish lists and restaurants in prime positions are also in demand but otherwise the market remains challenging.
Robust pricing
As 2022 began, the market was experiencing a shortage of supply coupled with a strong presence of buyers in the market that resulted in relatively robust pricing. However, the review reveals Christie & Co started to see a shift in the number of opportunities coming to the market in the following months and new instructions increased by 56% during the first half of 2022 – well ahead of the past two years.
Additionally, business prices continued to hold throughout the first half of the year and there was more parity between buyers and sellers pricing expectations, with average price achieved v asking price increasing by 3ppts (percentage points) in 2022 year to date compared to 2021 for pubs while that figure was at 10.2ppts for restaurants.
Although there was a lack of corporate activity in the first half of 2022, the review suggests this is likely to ramp up in the latter part of the year following recent announcements that Marston’s and Stonegate Pub Company are looking to sell off sites in their pub estates and Amber Taverns being put up for sale as well.
Portfolio boost
The review also mentions RedCat Pub Company, the investment vehicle founded by former Greene King boss Rooney Anand, continues to be particularly acquisitive, having exchanged and completed on several sites including the Jamaica Inn, which has seen the pubco’s portfolio reach more than 100 pubs and pub-hotels since its inception in February 2021.
Pubs & Restaurants: 2022 Mid-Year Review also noted challenges that lie ahead for operators including inflation, and the increasing costs of goods and staff may bring more opportunities to the market.
Christie & Co managing director – pubs and restaurants – Stephen Owens said: “During the first half of 2022, we saw the momentum that had built up throughout 2021 continue, with a number of active buyers seeking quality freehold assets from a limited pool.
“However, as we enter the second half of the year with increasing cost headwinds and shifting consumer confidence, we predict further assets will come to the market, which should provide those active buyers with increasing opportunities.”
