Twenty licensed premises changed hands in the Dublin market last year representing 2.74% of the current Dublin licensed premises population compared to a 10-year average of 2.29%.
“The Capital Value of the transactions in the Dublin market increased 56.53% from €9.64 million to €15.09 million in 2013,” states the report, “Leashold interest transactions accounted for 5% of total transactions in 2013, a reduction of 3.8% on 2012’s activity,” it stated.
The average sale price in 2013 decreased to €760,000 compared to €800,000 in 2012 “reflecting a greater number of licensed premises that had ceased trading compared to 2012”.
70% of last year’s Dublin sales were by private treaty while 20% underwent tender and 10% were sold via auction.
95% of Dublin sales were for below €2 million with the other 5% in the €2-4 million band.
Morrisseys reports that for the first time in five years Capitalising Ratios (Multiple of Turnover) stabilised, ranging on average between 0.5 and 1.5 times net turnover at the close of the year.
Capitalising ratios in excess of this could be achieved for “premises affording future business growth or alternatively businesses that enjoy a considerable volume of trade with ultimate economies of scale and a substantial bottom line profit ie top tier of the licensed premises property market”.
Nationally too, the market had to endure yet another difficult year overall on the back of four previous “very challenging years” according to the auctioneers who add that the market had demonstrated “signs of stabilisation and moderate growth”.
The report charts an 11% decline in the number of licensed premises since 2007 with this decline set at 5.8% in Dublin.
Current levels of debt have resulted in many such businesses becoming insolvent and failing.
“To date transactions in the market have been predominantly distressed sales which looks set to continue in the short- to medium-term,” reports Morrisseys.
However increased liquidity in the market together with banks engaging with their customers to resolve legacy debt issues has made it “more straightforward for potential vendors, purchasers and professionals alike who have heretofore experienced difficulty in gauging ‘sustainable and maintainable turnover’ to be more accurate in forecasting the future trading prospect of a business and in turn the true market value of trading units”.
The autioneers report that the principal demand for licences throughout 2013 was again from the Off-Licence sector of the market which has also been the stimulus for activity for the last eight years or so now.
The value of licences reduced slightly towards the end of 2013 to around €55,000, a long way from 2006’s peak of €180,000.
As for the year ahead, Morrisseys predicts a continuation of conditions prevailing in 2013 but it does add, "There is a sense of quiet optimism in the licensed sector and that the trade is emerging from a sustained period of significant turbulence albeit for businesses that are located in economically viable business locations."