Pubs: Reports renewed demand for pubs in rural and coastal locations

Despite being one of the worst hit sectors by the ongoing COVID-19 pandemic, Christie & Co report investor appetite in the sector remains healthy and many buyers appear undeterred from the unprecedented events of 2020. Since April 2020, Christie & Co report an uptick in market activity, driven largely by smaller, single asset transactions.
 
A key market trend for 2020, as highlighted in the report, is the increasing interest in community-based operations, largely influenced by people continuing to work from home. The trend of localisation is a positive one for the market and has driven a renewed demand for pub settings in rural and coastal locations, particularly those with letting rooms due to the boom in staycations and domestic travel seen in 2020.
 
In this year’s report, Christie & Co also surveyed a pool of pub operators to gain an understanding of sentiment within the market, and the outlook for business operations in 2021. The results resonate with the tone of the widely reported ailing sector, with 98% of respondents noting the pandemic has had high degree of impact on trade during 2020 and the majority (64.2%) stating they expect it will take the sector up to three years to recover. Despite this, 49% of those surveyed feel optimistic about seeing some recovery in 2021, with the key themes identified as less competition, diversifying service offerings and expanding their portfolio through strategic acquisitions.
 
Christie & Co’s pub price index for 2020 observed a 6.4% decrease in average prices, which follows a period of annual increases and some of the busiest years of activity in a decade.
 
Looking to the year ahead, the report also outlines Christie & Co’s market predictions which are:
 

• As government support in the form of grants, moratoria and rates relief begins to ease in Q2, we expect a wave of distressed assets will come to market, due to “zombie” companies unable to pay off debt or raise cash to grow.
• City centre, wet-led and late-night venues will be amongst the last to recover, however community-based settings in regional, rural and coastal destinations will continue to perform well and attract the most investor interest, as people continue to work remotely and stay closer to home.
• Large pub companies will continue to divest under-performing assets, both in the tenanted and managed house segments, presenting a good opportunity for equity-backed buyers (both new entrants and existing operators) to acquire freehold property portfolios of scale.

 
Stephen Owens, Managing Director of Pubs & Restaurants at Christie & Co comments, “2020 was undoubtedly one of the most difficult years that the sector has faced in recent times. However, there is now light at the end of the tunnel with the vaccine roll outs, and for those which come out the other side we expect a strong rebound with customers keen to return to their local pubs and bars. With strong buyer sentiment and appetite, we predict a busy year ahead.”
 
Click here to read the full report, ‘Business Outlook 2021: Review. Realign. Recover’.
 
 
For further information on this press release, contact:
Bronte Hughes, Corporate Communications Executive
P: 020 7227 0794 or E: bronte.hughes@christie.com