West is best

Tony Halstead reports on the growing business potential offered by pubs in the West Country

The West Country is enjoying a

property boom, with house prices soaring a massive 42% over the past four years. Pub values have risen in tandem as the region enjoys strong economic growth, bolstered by a tourist industry that is shedding its traditional May to September image.

Moreover, the counties of Devon and Cornwall are now more than just an escape

for city slickers with an eye on taking things easy. There are serious entrepreneurs investing in real estate with licensed trade properties high on their target list.

There are big business opportunities in the licensed trade and switched-on licensees and pub operators are beginning to make the most of the new openings.

Like rival tourist regions such as the Lake District and the Yorkshire Dales, running a pub in the south west is no longer an option for newcomers seeking a passport to semi retirement.

Year-round trade

There is good money to be made in the region thanks to a rising resident population and commercial investment, which means tourism is no longer the sole traditional economic provider for the region.

Torquay-based chartered surveyors and property agent Bettesworth has many years experience of handling sales of licensed trade properties in the region and is perfectly positioned to offer a bird's eye view of the current market.

Managing director Matt Bettesworth confirmed the changing profile, with many pubs now able to enjoy a year-round income from tourists and visitors.

"We are now experiencing much more of an all-year-round trade, with pubs that offer letting rooms attracting [during] autumn, winter and spring breaks, besides traditional summer visits.

"However, there are still pubs reliant on the busy six-month summer period and many do find it difficult to survive over the winter," he warns.

"Those with particularly high rents or those who have borrowed to their maximum to secure a loan on a business will struggle.

"Cash flow is absolutely critical for many businesses and those reliant on tourism in the pub trade need to plan carefully for the whole 12 months.

"A good summer here and a bad

summer there can have a dramatic effect on turnover."

But Bettesworth reports that the West Country remains a highly-popular area when it comes to buying a licensed outlet.

Prime pub properties by the sea are becoming increasingly difficult to find and

consequently attract substantial prices and premiums.

Popular "hot spot" coastal towns include Falmouth, Newquay, Padstow, St Ives, Salcombe, Dartmouth, Torquay and Sidmouth, while inland conurbations such as Taunton, Exeter and Truro offer urban-style pubs, which are nevertheless seeing a mini boom.

"Pub prices continue to rise, particularly in the freehold sector, where demand outstrips supply as a growing number of pub companies and breweries, buying for investment purposes, fuel the shortage and drive up prices," he reveals.

Population rise

The pub landscape in the West Country is changing in other ways, notably in its population where recent research by the Halifax bank confirms it has the highest net gain from internal migration of any UK region over the past 10 years.

More than 300,000 people have moved into the region than have moved away, boosting the population by some 6%.

Chartered surveyor Fleurets agrees that the days of the West Country being viewed as a "cheap property, slower lifestyle" region are largely gone.

"In recent years a great deal of development has taken place and with this has come a great deal of additional business for the licensed trade, notably pubs offering letting rooms," reports Jonathan Warner of the company's Bristol office.

He reveals that people approaching the company to buy a pub or a leasehold are very often "40-somethings" disillusioned with life in the so-called fast lane where investment and pension problems have pushed them along the self-employment route.

"What has been interesting to watch is the 'lifestyle shifters', who have not only brought a cash injection to some areas but also creative ideas and experiences from the capital; all of which has meant that standards of accommodation, service and hospitality have been on the rise," Warner adds.

"The continuing rise of property prices in the West Country adds to the evidence that this is truly a hotbed of activity in the UK's licensed trade."

Bright business prospects

Agents Christie+Co reports that the number of quality freehold and leasehold pubs coming onto the market highlights the buoyant state of the trade in the region.

The recent sale of the lease on the Salu-tation Inn at Topsham, Devon, for £99,500 and

another leasehold, the York Inn at Church-ingford, Devon, on the market for £89,950, provide the evidence.

"Operators are producing better concepts to attract more customers, whatever the weather, and many country pubs have now adapted business to draw custom throughout the year," comments Michael Easton from the company's Exeter office.

"The season has been extended with walkers and both singles and couples coming on holiday outside the summer for a quieter break. It's certainly fair to say that premium prices are still being achieved for the picturesque country inn, which largely comes down to desire for the property," he adds.

As with other regions in the UK, the scarcity of freehold pubs is forcing buyers to opt for leasehold deals, according to Nicholas Calfe from the Bristol office of Christie+Co.

"Free-of-tie leases are particularly in demand, along with partial ties for pubs with letting rooms and food potential," he points out.

Business agent case study

Recent deals by Westcountry Commercial Business Agents, based in Crediton near Exeter, underline the quality property that is now coming onto the market.

"So far this year there have been a number of notable freehold sales and instructions, especially in the £600,000 to £1.5m bracket," reveals company boss Gary Cleverden.

"We have a strong reputation for country and rural freehouses and inns and we are seeing purchasers being attracted to the region from the Midlands and the south-east, especially Sussex. These people have not only acquired a change in business direction, but in many cases have created a new income and lifestyle," he adds.

Cleverden reports that many first-time buyers have sold their residential properties to fuel a strong demand for attractive sizeable country pubs.

"We are also advising a number of small up-and-coming pub groups, such as those who own between three and 10 pubs and are now aggressively looking to expand still further. As the year progresses, this clearly indicates stability in interest rates and this new logical market is making transactions ever more comfortable for both buyers and sellers," Cleverden says.

Properties currently being marketed by Westcountry include the freehold Ashburton Arms at West Charleton, Kingsbridge, Devon, on offer for £474,000 and the lease of the Royal Oak, at Hooe near Plymstock in Devon, which is available for £110,000.