Pub investment market holds firm

Property agents have reported that the investment market is holding firm despite recent uncertainty.

Graeme Bunn, of Fleurets' London office, said: "Following the failure of London & Edinburgh and Provence, many investors have suffered erosion in their freehold values, as the market rental value transpired to be beneath contracted rent. With outward yield movement the impact on the investment value was exacerbated."

He added: "Our experience of this sector is that investors have predominately cast aside concerns, and recent investment sales by Fleurets have demonstrated the strength of the market."

Bunn sold the freehold investment interest of Harts Boatyard, Surbiton, on behalf of Thames Water, in March 2007. The Thames-side property, let to Mitchells & Butlers on a full repairing lease expiring in 2045, generated considerable market interest and multiple bids, and achieved a sale equating to a net initial yield of 3.6%.

Stephen Taylor, of Guy Simmonds, said: "The freehold investment market is invariably a good bet if rent is based on turnover. Sustainability is the key. It's a long term investment and inflated rents result in a high turnover of lessees. The ideal situation is a high level of profitability for the freehold owner and a chance for the lessee to prosper."

Bunn said: "Fleurets activity in the pub investment market will continue to grow and we anticipate a strong year, as despite the recent rise in borrowing costs, the UK economy is predicted to grow."

and the residential market shows little sign of waning."