Specialist business property adviser, Christie & Co, has launched its annual Business Outlook report, ‘Business Outlook 2024’, which reflects on key market activity, trends and challenges of 2023 and forecasts what 2024 might bring across the industries in which Christie & Co operates, including the pub sector.
The report acknowledges that whilst the UK pub sector continues to demonstrate resilience, parts of the transactional market remain challenging due to the interest rate hikes and stubborn inflationary environment during 2023, and pricing will need to adjust further to fully unlock the market. This resulted in a -8.1% drop in Christie & Co’s pub price index for 2023.
Nonetheless, the volume of transactions, deals agreed, and exchanges were all ahead in H2. This increased level of activity in the latter half of the year suggests that we should see a more dynamic market in 2024.
Christie & Co’s market insights reveal several key trends shaping the market as we head into 2024. Most notably, corporate buyers are back in the market, 86% of Christie & Co pub sales were sold for continued to use, and cash remains king.
The report also outlines Christie & Co’s market predictions for the year ahead, which are:
- Tenanted pub companies will continue to acquire freeholds up to £1m
- Limited M&A activity will take place as funding becomes less difficult and PE return to the market, looking to pick up opportunistic acquisitions (small to large groups)
- Regional and national pub companies will look to rationalise their estate and sell off their bottom end pubs
- The free-of-tie leasehold market will remain strong, as the cost of debt remains high, making the higher end freehold market less obtainable
- Cost pressures will begin to ease
- The number of managed pub operations will continue to rise
Stephen Owens, Managing Director of Pubs & Restaurants at Christie & Co comments, “Whilst there were significant challenges during 2023, the pub sector remained remarkably resilient from a trading and transactional perspective against a backdrop of interest rates rises and an inflationary environment. As we enter 2024, we have begun to see signs that these pressures will ease and our experience from the latter end of 2023 is that buyers are beginning to return to the market now that we have a more stable environment.”
