Christie & Co’s annual report reveals that pub market values held up well in 2022

The report notes that despite a positive first half of the year, the UK pub sector faced relentless economic and operational headwinds in 2022 which slowed down the transactional market in H2. However, Christie & Co anticipate increasing opportunities for pubs in 2023, once market conditions improve and stability returns.

The sector’s solid headline performance helped to retain investor interest and drive transactional activity in the first half of the year, albeit the market has become polarised, with strong demand for assets at the premium and value end of the spectrum and fewer opportunities in the mid-market.

Christie & Co advised on over 2,100 hospitality businesses across the UK in 2022, with the majority of pub transactions comprising individual asset sales, as the market for pub assets under 500k remains resilient.

The report revealed that Christie & Co saw a 29% increase in new instructions compared to 2021 and a 4.8% increase in the number of pubs achieving their asking price, demonstrating that values held up reasonably well. This is supported by the 3% rise in our pub price index for 2022. Overall, 87% of pubs sold were purchased for continued use as a pub, illustrating the strength of the market and just 5% were distressed sales, half of which we saw pre-pandemic.

According to Christie & Co data, freehold assets remained most attractive to buyers, although there was still good demand for free-of-tie leasehold sites in prime locations. On the whole, deal times remain protracted and increasing interest rates and difficulty in pricing debt has dampened the M&A market however we expect this to pick up in 2023. Several pub companies, such RedCat, Red Oak and Greene King continue to be particularly acquisitive, having exchanged and completed on several sites with the support of Christie & Co.

Looking to the year ahead, the report also outlines Christie & Co’s market predictions which are:

• Uptick in distressed activity and the return of single assets disposal campaigns
• Increased M&A activity as operators seek synergy and savings
• Return of opportunistic buyers and private equity
• Individual cash buyers looking for affordable pubs
• Continuing demand for pubs with accommodation, and coaching inns
• Increase in other operating formats such as the franchise model
• Managed house numbers to remain static in light of escalating costs pressures

Stephen Owens, Managing Director of Pubs & Restaurants at Christie & Co comments, “2022 started off strong, with a number of PubCo buyers actively seeking similar types of quality assets and this demand, alongside a lack of supply, helped keep pricing strong.

“As we moved into the second half of the year and the sentiment amongst buyers and sellers became more cautious due to challenging trading conditions, the market outlook became more ambiguous, although headline trading remained resilient. Subsequently, values continued to hold, and we have kicked off the new year with increasing levels of activity, which should provide some exciting opportunities for buyers.”

Click the link below to read the full report and watch the exclusive interview with Stephen Owens, Managing Director - Pubs & Restaurants and Jonathan Neame, Chief Executive of Shepherd Neame. 

‘Business Outlook 2023: Finding Clarity’.

For further information on this press release, contact:
Bronte Hughes, Corporate Communications Manager

P: 020 7227 0794 or E: bronte.hughes@christie.com