COULD 2013 BE THE YEAR FOR PUBS IN KENT AND SUSSEX

Christie and CoWith an estimated 18 pubs closing every week in the UK, it would be all too easy to presume that the days of the ‘British Boozer’ are numbered. But how is this reflected in the South East’s public house market?

Since the dramatic market downturn of 2008, the pub industry has experienced an ever increasing range of issues including declining beer sales, rising costs and increasing taxes. It cannot be denied that these and other challenges have claimed many casualties and prompted a decline in pub numbers, but the industry as a whole has demonstrated its ability to adapt and survive. Credit should be paid to those operators who have braved the storm, and modified their approach to business in order to meet the needs of locals and increase revenue. As a result of this hard work, a number of operators in Kent and Sussex have reported positive trading in 2012 when compared to previous years.

This stability in trading performance was mirrored in the South East pub property market during 2012. With banks and major pubcos busily disposing of public house assets, pub businesses and vacant pub properties in Kent and Sussex have never been more affordable, and as a result there were plenty of appealing opportunities sold by Christie + Co in 2012, and a number already in 2013: Ivy House, Canterbury; Hawkenbury Inn, Tonbridge; Falstaff Inn, Ramsgate; City of London, Dymchurch; Weston Arms, Strood; Gallipot Inn, East Grinstead.

Although many of the assets sold in 2012 were from the bottom end of the market, some were of very high quality, with sales prices greatly reflective of the condition and trading performance of the asset. Operational freehold pubs, as well as leasehold pubs free from trading ties continue to be the most highly prized pub assets, with strong competition shown for such businesses when they do reach the market. In addition, vacant public houses in the South East continue to be in high demand as they provide buyers with a blank canvas on which to stamp their own style of operation, as well as having the potential for alternative use such as conversion to residential. Despite the strong demand for pubs with development potential, 62% of the 430+ pubs sold by Christie + Co in 2012 were purchased for continued pub use.

In 2013, we expect to see trading performances in the public house sector improve, albeit gradually as more and more operators continue to expand their family-friendly food offerings. In 2012, Christie + Co witnessed that 75% of pubs sold were purchased by experienced operators, with proven business models in place, ready to compete with food-led pubco operations and restaurants.

It would be a grave misconception to assume that the pub market is stagnant, as Christie + Co experiencing a 7% increase in the number of pubs sold in 2012 compared to the previous year. Following a fierce drop in prices in 2008 and 2009, average pub prices have appeared relatively stable in the last few years, giving individual buyers and private equity investors, especially those based locally to the business, confidence to return to the market and as a result of various pubco tenanted and lease pub disposal programs, the number of traditional freehold free houses owned and operated by private/small multiple operators has grown from 17,000 to over 20,000. This is a clear indicator that pub prices are now at their lowest point, since the downturn in 2006.

The saleability of a pub will come down to three key aspects: price, marketing, and using an experienced agent with local knowledge and national coverage. If you would like to discuss in confidence any aspect of the pub market in more detail, or alternatively the sale of your business, Robert Cockayne and Andrew Moore of the Maidstone office of leading pub specialists Christie + Co will be pleased to take your call on 01622 656000.

 

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