2021 Dublin pub sales values triple
The Brazen Head – Ireland’s oldest pub. One of the Premium high-profile licensed premises brokered in 2021 by Lisney (incorporating Morrissey’s).
2020 saw 13 licensed premises being sold in Dublin (or 1.78% of the total population of Dublin licensed premises) which realised a combined value of over €41 million. But this was tripled last year when 30 sales (representing 4.11% of Dublin’s total pub population) returned a combined value of more than €124 million. (The figure for 2019 was 16 transactions or 2.19% of total Dublin licensed premises.)
According to the auctioneer, “The Dublin licensed premises property market reached its highest-ever value in possibly the most challenging trading environment in its history, with the market witnessing a 131% increase in the volume of sales and 198% in overall value realised when compared to the previous year”.
While Dublin City Centre suffered from the absence of a working population as a result of the need to Work From Home and the lack of cultural/sporting events, suburban pubs enjoyed more favourable trading prospects, states the report, “… as in the vast majority of circumstances, they were enabled to capitalise on the benefit of an increased volume of patronage and discretionary spend through the emergence of remote working coupled with a general reluctance in customers to frequent the city centre”.
Furthermore the 2021 pub market continued to suffer from a shortage of supply with many operators postponing their decisions to enter the market until such time as trading restrictions ceased, states the report.
Supply remained stable throughout Quarters 1 to 3 in 2021 with five sales completed in each of the first two quarters and six in Q3, states the report, adding, “Q4 by comparison was strong, accounting for the remaining 14 transactions in the year”.
Lisney Morrissey’s therefore expects the initial months of 2022 to follow the end of Q4 with strong appetite and engagement from the market as purchasers remain active in seeking out opportunities, most of which are being explored via off-market approaches.
Lisney Morrissey’s also cites one notable change within the market – the significant rise in demand for well-located suburban units capable of enjoying high volumes of both trade and profit.
This demand has come from many purchasers that historically only focused on city centre areas but which now look to the suburbs too.
“In continuation of the trend of recent years and possibly an indication of the make-up of the market into the future” states the report, “Private Equity became a principal demand driver for pubs as a going concern. These purchasers have teamed up with established operators and are continuing to target the upper tier of the Dublin City market and may begin reviewing prime assets within other cities such as Galway, Cork, Limerick and Kilkenny.”
Off-market activity
Off-market activity has increased steadily in recent years. This accounted for 23% of total sales in 2020 rising to 37% in 2021. But in terms of market value, off-market sales accounted for 49% of total market value in 2020 and 40% in 2021.
Licence values
The pandemic and the outright absence of transactions throughout Q2 & Q3 of 2020 were the cause of licence values falling from €50-52,000 in Q1 of 2020 to €40-44,000 in Q4 of the same year.
But by Q4 of 2021 licence values had recovered their lost value and were transacting in the region of €55,000.
Provincial market
2021 was again a quiet year in terms of activity within the provincial market with limited transactions occurring in the cities of Cork, Galway, Limerick, Waterford and Kilkenny, states the report.
Looking forward
Private Equity’s net is likely to widen “in terms of consideration being given to other key city trading localities outside of Dublin” in 2022 predicts the report.
“These funds in particular will continue targeting the upper-tier of the market, seeking established pub groups and/or high-profile venues and we are aware of several with active 2022 requirements.”
The auctioneers have also witnessed “positivity” feeding into the lending sector “… with both pillar banks and non-traditional lenders witnessing a notable uptake in funding applications for licensed premises property”.
