Research from Fleurets found the average freehouse sale price nationally is £800,364 – down 9% while for leasehold sites, the average sale price is £37,000 – a drop of almost a quarter (24%).
The research also broke down the freehouse sale prices into the north and south with the former up 8% to £473,000 while the latter dropped by 3% to £950,000.
Data based on average sale price of pubs Fleurets has sold in the year.
The property agent cited mounting pressures throughout last year as rising costs hit the sector alongside confidence and spending squeezes filtered through into lower sale prices, subdued transaction activity and continued pub closures in its Annual Survey of Pub Prices report.
More segmented market
Fleurets director and head of national agency James Davies said: “Rising wage costs, higher national insurance and increasing business rates have reduced the profits pubs can sustainably generate.
“Buyers price pubs on future earnings, past performance is just a guide and the pressure on profit is now feeding directly into lower sale prices, particularly at the bottom end of the market.
“We are seeing a more clearly segmented market. Premium food-led pubs, particularly those with accommodation and value-led community pubs continue to perform well while under-invested pubs without a clear offer are increasingly vulnerable.
“Opportunities still exist for operators with the right strategy and resources but pubs at the bottom end face the greatest risk.”
Future outlook
He added: “Targeted support and improving economic conditions will be critical to help many pubs survive.”
Elsewhere in the report, it outlined key highlights including the high-profile acquisition of Loungers by Fortress as well as the collapse of Oakman Group into administration in the summer, resulting in six site closures and job losses with 10 freehold sites sold to The Restaurant Group’s Brunning & Price alongside one freehold and 13 leasehold sites sold to Upham Inns.
Looking forward, the report outlined how hospitality continues to show resilience with pubs remaining at the forefront however, further increases in wages and business rates will add further cost pressures.
Fleurets also highlighted corporate operators remain acquisitive, particularly for well-positioned, sustainable pubs that fit a clear operational model.
