Demand for rural and coastal pubs increases

By Georgi Gyton

- Last updated on GMT

Pub and restaurant property market report

Related tags: Pubs, Property, Christie & co

Investor appetite for pubs remains healthy with many buyers undeterred by the impact of the pandemic, according to Christie & Co’s Outlook 2021 report.

Demand for pubs in rural and coastal areas increased during 2020 as the numbers of people working from home led to increasing interest in community-based operations, said the property adviser. While those with rooms also saw a boom in activity as more people had staycations.

Despite being one of the hardest hit sectors, the pub market has seen an uptick in market activity since April 2020, driven largely by smaller, single-asset transactions, noted the report.

The opinions of pub operators were also gauged as part of the report, with 98% of respondents stating that the pandemic had impacted trade and 64.2% stating they expect it would take the sector up to three years to recover.

On a more positive note, 49% of those surveyed felt optimistic about seeing some recovery this year, with some of the key themes identified including: less competition, diversified service offerings and companies expanding their portfolios through strategic acquisitions.

Looking at price, Christie & Co’s pub index price for 2020 recorded a 6.4% decrease in average prices, which followed a period of annual increases and some of the busiest years of activity in a decade, it said.

The property adviser said that as government support in the form of grants, moratoria and rates relief eases in Q2, it expects “a wave of distressed assets will come to market”. It also anticipates that 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”, added the report.

Stephen Owens, managing director of pubs and restaurants at Christie & Co, said: “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.”

Looking at restaurants, the report noted that the sector was already experiencing a state of distress, driven largely by an over-saturated market, but said the resilience of the sector had been highlighted through operators’ ability to adapt their businesses in line with Covid restrictions, with areas such as food delivery seeing growth as a result – up 20%. 

Compared with 98% of pub owners, 85% of restaurant owners said the pandemic has had a negative impact on their business, but interestingly 15% said there had been a positive impact which was attributed to the opportunity to expand their offering through takeaway as well as streamlining costs. While 59% said it would take up to three years to recover, and the same percentage said they felt optimistic about recovery in 2021.

Christie & Co predicts that the growth in food delivery and the takeaway market will be sustained in the year ahead. “The uptake of touch-free, digital and app-focused ordering systems by both consumers and operators will increase, should operating restriction and social distancing remain,” it said. It also anticipates that casual dining operators will continue to struggle, especially those in city centre locations, but that the drops in value of large private equity backed restaurant groups will stabilise in 2021.

Related topics: Business

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