Christie & Co report finds that the predicted increase in ‘distressed’ market activity has not materialised – yet
DESPITE the ongoing challenges facing the industry, the pub sector remained ‘remarkably resilient’ through 2022, according to property agent Christie & Co.
Publishing its annual Business Outlook report, the company said the pub sector across the UK had performed well in the course of last year, with the sector’s ‘headline performance’ encouraging both new and established operators to acquire pub properties.
Across the UK, only 5% of pubs the company sold were ‘distressed sales’, ie pubs that had gone out of business.
In fact, Christie & Co said that an increase in ‘distressed activity’ predicted for last year did not materialise and ‘remains at all-time low levels’.
This has helped pub property values to remain steady, as the market has not so far been flooded by distressed sales, meaning supply lagged behind demand.
But the business acknowledged that there could be more distressed sales in 2023 as pubs struggle with rising costs.
Christie & Co said there was demand for freehold properties and free-of-tie leases in 2022, with the market split between properties at either the value or premium end.
Mid-market venues proved less popular with buyers in the past year.
Sales were split between corporate acquisitions by business such as pub companies and ‘individual cash buyers’.
And while high-street banks were said to be cautious in lending to the sector, finance has generally been available to established operators, said the company.
Speaking to SLTN at the Scottish launch of the Business Outlook report, Brian Sheldon, the company’s regional director for Scotland, said most of the deals he had managed last year had involved established operators with several existing units.
“I think a newbie is looking at the bottom end (of the market),” said Sheldon.
“They don’t have the same amount of cash, they’re not as recognised with banks, albeit they may have a relationship with a third-party investor, who has the money they will lend to facilitate a deal.
“So there are new entrants, but I would say a lot of the deals done just now will be, potentially new entrants with a sizeable lump of cash, but predominantly established operators.
“When I think of the deals that I was involved in last year, they’ve all been those that have got a couple of businesses behind them.”
He added that the vast majority of Scottish sales Christie & Co had handled in the past year had seen the units continue to function as pubs, rather than be re-developed for other purposes.
