Dublin pubs continue growing in value

McDonagh’s in Dalkey – one of the high-profile pubs sold by Morrisseys in 2016. McDonagh’s in Dalkey – one of the high-profile pubs sold by Morrisseys in 2016.

Some €62.17 million was realised from the sale of 35 Dublin pubs in 2016 according to Morrisseys auctioneers in its annual review of the Irish pub market which stated that the capital value of the market returned the strongest growth in values since the market was at its height in 2006.

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16 February 2017 | 0

However sales of Dublin pubs ran at 39 in 2015, but Morrisseys pointed out that at 4.79% of stock levels, the 2016 figure was more in line with normal levels of sale.

2016’s market capital value returned an average sale price of €1.78 million.

This compares to a market value of €43.33 million and average sale price of €1.11m in 2015.

Three-quarters of the Dublin pubs sold went for under €2 million in 2016 with 17% going for between €2 million and €4 million. Some 2.86% went for between €4 million and €6 million and a similar percentage were sold in the €8m to €10m bracket with those in the €10m to €12m bracket accounting for 2.86% of Dublin pub sales too.

 

Insolvency-related sales decline

Some 56 units were offered for sale in the Dublin market in 2015 of which 64.3% were insolvency-related sales, according to the report which added, “This figure reduced to 53.7% in 2016, illustrating an increase in private instructions year-on-year and the start of a return to a more normal functioning market”.

No pubs were sold ‘post-auction’ or ‘by tender’ last year and pubs going to auction accounted for 11.43% of the total while those going by private treaty continued to dominate sales, being responsible for 88.57% of the total.

Those pubs which went to auction represented the lower value bandwidth from €400,000 to €493,000 in 2016 & €315,000 to €395,000 in 2015, states the report.

Demand continued to be focused on well-located licensed premises in areas enjoying an established population and good transport links whether they’re located in ‘city centre’, ‘mid town’ or ‘suburban’ locations.

Ireland’s traditional pub groups were relatively inactive in 2016, choosing instead to concentrate on consolidating and growing trade through their existing portfolio rather than expanding, believes Morrisseys. But ‘younger’ pub groups – Press Up Entertainment, Bodytonic, Alan Clancy, Galway Bay Brewing Company, Chris Kelly Group – remained firmly in expansion mode.

 

Outside Dublin

According to the report the market forces that prevailed within the Dublin market were mirrored, generally speaking, throughout the provincial market with a recovery in value and a consolidation of trade within the principle population centres nationally.

“But the provincial rural market continues to struggle with the bulk of closures located in sparsely populated districts with an oversupply of competing licensed premises.”

 

Licence value

The capital value of licences crept up from €55,00 to €60,000 in 2016 for the first time since 2010, stimulated mainly by a lack of supply. Demand has been mainly from convenience stores, discounters and forecourt retailers.

 

 

2017 outlook

The auctioneer expects an increase in private sales in 2017, predominantly from publicans considering retirement.

“These may have heretofore postponed offering their assets for sale due to depressed market conditions and the resultant lower values.”

But trading levels have now improved significantly.

The auctioneer’s research indicates that the trading levels of prime Dublin City units (turnover in excess of €1.5m) have increased by 11% since 2015 and by 18% since 2014. The strongest-performing trading district was Temple Bar with trading up 21% on average on 2007/2008 levels.

Prime Dublin suburban units (turnover in excess of €1m) enjoyed more modest growth with their trade growing by 3.6% on average since 2015 and 1.2% between 2014 and 2015.

Prime units in large towns and cities outside Dublin (turnover in excess €1m) showed an increase of 4.2% on average since 2015 and an increase of 11.5% between 2014 and 2015.

 

 

 

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