This was a lower volume of pub sales than anticipated as improved trading conditions made some vendors reluctant to sell believes auctioneer CBRE who presented its review of 2016 and outlook for 2017 at the RDS recently.
The average price for a Dublin pub in 2016 was €1.44 million and this is expected to rise further this year. Against a backdrop of continued job creation and record tourism numbers, most pubs now experience better trading conditions and perform well from a turnover and profitability perspective, states CBRE in its report.
Fewer instances of distressed sales occur in this sector now with a notable increase in the number of consensual pub sales over the last 12-month period in particular, notes the auctioneer.
“While the total capital value of the Dublin pub market has remained relatively stable over the last few years, the average price achieved for Dublin pubs has continued to trend upwards from €1.15 million in 2014 to €1.25 million in 2015 and to €1.44 million in 2016. The average sale price is expected to increase further in 2017 considering that trading conditions in this sector continue to show signs of improvement,” states CBRE, “We expect to see an increase in the number of Dublin pub properties being offered for sale in 2017 with up to 40 licensed premises expected to change hands this year.”
Demand for suburban pubs likely in 2017
Many publicans and pub groups are now gearing up to acquire additional premises. Demand remains strongest for city centre pub properties although supply is expected to continue to remain constrained in the city centre this year.
As a result, CBRE expects to see an increase in demand for good suburban pubs this year as many frustrated bidders and under-bidders extend their searches outside of the city centre in order to secure premises.
“A number of Dublin publicans are due to retire from the trade in 2017” adds the auctioneer, “which, in turn, will give rise to some good buying opportunities in the suburbs of the city this year. Other opportunities will come from re-trades while a limited number of sales will be distressed sales.”
The ability to transfer pub licences to restaurants is diluting both planning and licensing laws and creating considerable confusion, warns CBRE.
“Any premises can now apply for a 7-day publican’s licence if they comply with licensing and health and safety requirements so we expect to see an increase in the number of restaurants applying for conversion to pubs over the next while.”
There has been some improvement in the availability of funding in the licensed sector over the last 12 months with the traditional pillar banks increasingly willing to lend and refinance good pub properties, states the report.
“Some banks are also funding many of the necessary refurbishment programmes that are underway in licensed premises throughout the city. The profile of pub purchasers is changing however and is now increasingly led by a cohort of young, enthusiastic and talented pub professionals seeking new opportunities and supported in many cases,not by traditional bank lending but by third party investment. We are also seeing pub groups and specialist operators becoming more active in this sector. These purchasers place great focus on product presentation, interior design and the provision of food. A noticeable trend is that many areas of the city are now marketing themselves as specific pub districts and competing directly with each other for trade, with a particular focus on social media promotion and advertising.”
2017 will be more uncertain from an economic perspective, believes CBRE.
“There are legitimate concerns about Brexit and the potential impact weaker Sterling may potentially have on Irish tourism and in turn the pub trade considering Ireland’s traditional reliance on UK tourism. Nevertheless trade in Dublin city centre is expected to remain relatively strong regardless and we are confident of seeing an increase in the volume of pub sales in the Dublin market in 2017.”