THE AGENTS

Paul Breen

Director

Colliers CRE

Home-owners across the country were breathing a huge sigh of relief last Wednesday when the Bank of England revealed that they were freezing interest rates at 5.5%.

As many industry figures had predicted a rate rise, the decision was welcomed by borrowers, even though many feel that the Bank was delaying the inevitable and we will see at least one further increase before the summer is out.

But with interest rates having risen four times during the last 12 months, has this had any impact on the pub market?

Demand for quality sites is as strong as ever and we have not found any noticeable decline in the level of sale prices being achieved - in certain areas, prices continue to rise.

It would, however, be fair to say that purchasers are showing a little more caution, especially at the lower end of the market, which can slow the sale process down. We have also found that an increasing number of transactions have become subject to a detailed property survey, something that hasn't always been the case in recent years, especially with corporate buyers.

There appear to have been fewer corporate transactions in the first six months of 2007 than during the same period in 2006, but I think it would be misleading to attribute this to the rise in interest rates. If, at the end of 2007, we can conclude that there has been less corporate activity, then I suspect this will simply be down to a shortage of willing vendors rather than acquisitive buyers.

With most economists predicting that interest-rate rises will only be a short-term measure and with long-term money rates being fairly stable, we should continue to see a steady flow of investment into the sector, at least some of which will go towards improving our pubs.

While we have seen an unprecedented level of investment in recent years, this will need to continue if we are to avoid reverting back to the days when it was just accepted that your local pub had peeling wallpaper, ripped seating and carpet that made your feet stick to the floor!

There are still plenty of pubs that haven't seen investment for years. If they are to get the investment they so badly need to survive, then a healthy economy with interest rates that remain at an affordable level, is going to be vital.