THE AGENTS

James Grimes

Director, AG&G, Chartered Surveyors, London

Individual freehold pubs remain a relatively rare commodity and the market is strong. In recent years this company has been favoured with many freehold pubs to sell across the country, especially in London, where our agency services have been used for sale, letting or acquisition of hundreds of pubs, including close to 100 that have broken the £1m mark.

The most significant trend is the demand for freehold pubs from non-pub operators. While traditional, large pub-operating companies and breweries were able to outbid the rest of the market for any freehold pub, this is different today.

Non-pub operator buyers tend to fall into three main camps: property developers/investors, trophy purchasers and food-led operators. The property players aim to change building use, frequently towards residential, and often seek planning consent for redevelopment or extension.

Other moves may include letting off parts of the pub, generally through horizontal division, for existing pub use, restaurant use or retail uses at ground floor with residential above. Such buyers are looking to add value by gaining enhanced planning consent, "building out" or setting up an investment which they often sell on.

Trophy purchasers tend to pay a price reflecting a desire to own a certain pub asset. Such buyers are prepared to accept a lower return and pay a higher purchase price than the wider market, which is driven by "normal" sector returns. Food-led operators are also showing that they covet pubs - Michelin-star chefs Gordon Ramsay, Tom Aikens and Heston Blumenthal all operate from premises that formerly sold nothing more sophisticated than a "pie and a pint".

The property world, particularly in London, remains affluent. Following 12 years' steady growth, "copy-cats" are jumping on to the bandwagon. In a recent off-market deal we handled on behalf of a major pub owner, at least 11 of 17 multi-million pound freehold properties sold went to property players. Pub operators were unable to compete.

If you are in the fortunate position of owning, and considering selling, a freehold pub, it is wise to consider trading accounts, property size, ease of sub-division or whether demolition and re-build is possible.

At the end of the day, size really does matter.