Property market picking up pace

The licensed trade property market in Scotland is said to be in good health as 2016 gets underway, with improvements in the economy and stable low interest rates having boosted confidence in the sector.

Spread Eagle Hotel
• Property firm Bruce & Co sold the Spread Eagle Hotel in the Borders town of Jedburgh last year.

Peter Seymour of Seymour & Clink said market conditions were “significantly better in 2015 than 2014”, adding that the firm saw a 71% increase in transactional activity last year.
“We have also seen a significant change in the type of transaction with the majority of our sales in 2014 being either leasehold or a lease purchase,” said Seymour.
“This has completely reversed with 67% of all sales in 2015 being freehold.”
Graeme Smith of Smith & Clough Business Associates said licensed trade property values “levelled in terms of values” in 2015 “and in some cases even surprised with the results”, which he said bodes well for the year ahead.
But uplift in the property market wasn’t consistent throughout 2015, according to Alan Goldie, director at The Restaurant Agency.
Goldie said improvements were “further kicked on” following the general election in May.
“A level of confidence returned to the market with interest rates stable and some willingness from lenders to step back into the leisure sector at lower lending levels,” he said.
Improvements in trading conditions are also helping to shore up property values, suggested Paul Hart, director of commercial sales at ASG Commercial, who said that many operators “are showing an increase in turnover and profitability, which of itself increases buyers’ confidence”.
“This is also being supported by positive booking going forward,” said Hart.
Paul Shiells, director of licensed and leisure with Colliers International in Scotland, agreed that the “positive trend” in the property market should continue “as the economy remains robust, interest rates stay low and increases in real incomes lead to higher disposable income for many customers”.
However, he suggested this improvement has yet to translate into easier financing for operators.
“Major banks remain a little cautious about the sector, but funding is available for good quality freeholds,” said Shiells.
Andrew Steen of Bruce & Co suggested that the availability of financing should improve as “funding markets continue to ease”.
However, he said lenders will want to see “robust financials with mixed income streams” as well as plans to cover the cost base increase as a result of the National Living Wage.