Pub prices rise 9.2%, says Christie & Co

Demand for freeholds from both group and independent publichouse operators helped drive up pub values by 9.2% in 2004, according to licensed property agent Christie & Co.

It said that demand continued to exceed supply throughout the UK, with leasehold pubs becoming increasingly popular due to the shortage of freeholds and the lower cost of entry to the market for first-time buyers.

Several increases in interest rates and signs of a slow-down in the residential housing market did nothing to dampen buyers' appetites.

Developers continued to pay high prices for pubs that lent themselves for either conversion to alternative use or development of the whole site.

Christie & Co licensed retail director Colin Wellstead said: "If Punch continues on the acquisition trail as we expect, 2005 will see two tenated/leased pub companies with porfolios close to the 10,000 pubs ceiling set by the Government to avoid competition issues."

Predictions for 2005

l Further consolidation on the high street.

l Increasing number of property players in the market.

l Continuing shortage of freehold properties for sale.

Trend towards leasehold pub sales to continue, up from 40% of Christie & Co's sales in 2004 to around 50%.

Smoking ban will bring changes to the market, as publicans seek ways to circumvent the rules by separating food sections from drinking areas.

l Pub companies and brewers to remain active buyers of pubs.

Pub trade will have to tackle critical issues such as binge drinking.

New licensing regime could cause backlog and increased bureaucracy.