Fewer sites on sale pushes freehold prices up 41%

Property agent Fleurets’ Survey of Pub Prices – January 2023 said demand for properties has remained strong despite rising inflationary costs, war in Ukraine and constant Governmental changes.

It said the average sale price in the north of England was up 24% to £530,688 off an average fair maintainable trade (FMT) value of £412,750 and, in the south, the average price rose by 54% to £1,148,750 off a (FMT) of £687,000. This meant the average price across England had risen by 41% to £874,056.

Bottom-end freeholds – those sold without accounts or perhaps closed/vandalised – have seen their average sale price up by 15% to reach £373,712. In the north, a 23.7% boost to £322,629 and up 16.2% in the south to £449,119. Meanwhile leaseholds – which covers a wide range of high street bars, locals and food-led pubs – saw a 27% hike in average sale price to £30,813.

Squeeze expected

Sales during 2022 were down versus 2021 for managed hospitality groups and the sector should expect a “squeeze on discretionary spending in 2023”.

The report stated: “Consumer confidence is reported to be at an all-time low and appetite for major personal purchases is significantly down. It is yet to be seen how the lack of confidence and the reduction in discretionary spending power will affect the hospitality sector.”

However, Fleurets believes community locals to fare well as will flagship venues and leading brands in bigger towns and cities for “big nights out” while spending will be reduced until the second half of 2023 meaning there could be more pub closures and an increase in insolvencies.

Some support to remain

Closures will be offset somewhat by banks not withdrawing their support after the “bad press” following the financial crisis of 2008/09 and tenanted pubcos are expected to help their publicans with support packages and flexible deals.

New concepts and late-night, experiential businesses are precited to trade well while the craft beer and cocktail bars markets will continue to flourish. Pubs in tourist locations will compete favourably due to the poor exchange rates for the sterling pound.

Additionally, some pubs have taken advantage of relaxations in planning laws that have allowed increased food services to their customers therefore retaining footfall.