The real estate market will gain momentum according to Christie & Co

The hotel property retailer has launched its Pubs and restaurants: mid-year review 2022​, who also said the sector has seen a strong return to trading in the first half of 2022, which has helped spark investor interest in pubs and restaurants.

However, he said the transactional market has become polarized, with demand for high-end, spectrum-value assets and fewer opportunities in the middle market.

Freehold assets remain the most attractive, although there is still good demand for freehold sites in prime locations. Upscale pubs with outdoor space and accommodation remain at the top of buyers’ wish lists and restaurants in prime positions are also in demand, but otherwise the market remains tough.

Robust pricing

At the start of 2022, the market was experiencing a shortage of supply coupled with a strong presence of buyers in the market, which resulted in relatively robust prices. However, the review reveals that Christie & Co began to see a change in the number of opportunities coming to market over the following months and new instructions increased by 56% in the first half of 2022 – although before the last two years.

Additionally, business pricing continued to hold up through the first half of the year and there was more parity between buyers’ and sellers’ price expectations, the average price achieved versus the price asked increasing by 3 ppts (percentage points) in 2022 year-to-date compared to 2021 for ads. while this figure was 10.2ppts for restaurants.

Although there was a lack of business activity in the first half of 2022, the review suggests this is likely to accelerate in the latter part of the year following recent announcements that Marston’s and Stonegate Pub Company are looking to sell sites in their ad domains. and Amber Taverns also being put up for sale.

Strengthening of the portfolio

The review also mentions RedCat Pub Company, the investment vehicle founded by former Greene King boss Rooney Anand, continues to be a particular acquirer, having traded and completed on several sites including the Jamaica Inn, which has seen the pubco portfolio grow to over 100 pubs and pub-hotels since its inception in February 2021.

Pubs and restaurants: mid-year review 2022​ also noted the challenges ahead for operators, including inflation, and rising costs of goods and personnel, which could provide more opportunities in the market.

Christie & Co managing director – pubs and restaurants – Stephen Owens said: “In the first half of 2022 we saw the momentum that had built up throughout 2021 continue, with a number of buyers active seeking quality freehold assets from a limited pool.

“However, as we enter the second half of the year with growing cost headwinds and shifting consumer confidence, we expect new assets to come to market which should offer these buyers assets growing opportunities.”