Pubs look to Weatherspoons but many problems remain
Published 14/05/2015 | 02:30
Dublin's premium pub market is continuing to gather momentum as reflected in a number of recent sales and sales agreed. As well as Wetherspoons expanding its chain of Irish pubs, a number of Irish entrepreneurs have also been snapping up pubs.
Prices for the premium pubs are reckoned to have recovered about 25pc over the last 18 months according to specialist agent Bill Morrissey. "However they are still about 25pc off their peak," he adds.
Increased employment and incomes has helped to increase the on trade, making good pub businesses more attractive. Banks are much more willing to lend to purchasers and buyers are also supported by investors. According to one source some of these investors have helped to rescue debt laden publicans by taking half shares in pubs and subsequent increases in properties have grossed them paper profits.
A combination of improved economic conditions, trading activity and liquidity has lifted demand and yet another factor is that quite man investors who are taking shares in well known Dublin pubs in the expectation that returns will be better than from deposit accounts.
A Morrissey analysis shows sales increased five fold from an average of eight a year at the bottom of the market, to 45 last year.
So far this year the supply has been slower but John Hughes of CBRE expects a number to come to the market in the coming months.
Morrisseys recently completed the sale of Baldoyle House, Baldoyle for a sum believed to have been over its €850,000 asking price.
Other pubs to recently change hands include O'Shea's in Clonskeagh for a sum believed to be around €900,000. Auctioneer John P Younge withdrew it from auction after the bidding peaked at €600,000 and sold it after auction to developer New Generation headed by Greg Kavanagh and Patrick Crean.
A spokesperson said the intention is to resume pub trading and there were no plans to develop on the site. Part of the car park belongs to the local authority.
John Younge also sold Cusacks North Strand Road near Croke Park after auction for an amount believed to be over its €650,000 guide price. Nearby Clonliffe House on Ballybough Road, a corner premises with development potential, is for sale through Morrisseys with a €700,000 guide.
CBRE's John Ryan recently handled the sale of the Tuning Fork on Whitechurch Road, in Rathfarnham, Dublin 16, for a sum believed to be well in excess of the €600,000 guide price. It is believed that new owner plans to convert it to a funeral home as it is on a prominent land mark site and close to the local church.
Mr Ryan also handled the sale of The Cardiff Inn on Cardiffsbridge Road near Cardiffsbridge Shopping Centre in Finglas West for which he had been quoting €800,000 as well as The Berkeley on Mountjoy Street, close to the Mater Hospital, which is reputed to have sold for around €400,000.
UK chain JD Wetherspoon, has just completed the purchase of a former Permanent TSB bank branch on Lower Abbey St for a price believed to be around €1.5m.
It is located next to the Irish Life Mall where the former Floridita Bar closed after the crash. Also nearby The Plough bar opposite The Abbey Theatre has also been closed. So it is interesting that Wetherspoons should opt to convert a bank into a pub. Perhaps it is expecting that the pub and food trade will pick up in the street following the completion of the Green Luas line extension to nearby Marlboro St which would in turn make Abbey St a key junction and meeting place on the Luas network.
Also close to the Green Line, at Camden St, Wetherspoons is working on revised plans for a 100 bedroom hotel.
The chain bought this property before it came to the market when agents CBRE were believed to be considering asking €5m for it. Already its Irish chain includes The Great Word in Blanchardstown, Dublin 15, as well as pubs in Dun Laoghaire, Blackrock, Co Dublin and The Newport Café Bar in Paul St, Cork City centre.
They also recently received planning permission to expand the Old Boro pub in Swords, Co Dublin, which they purchased last year. The firm also confirmed that it is in discussions about purchasing a site in Carlow. It plans to increase its chain in Ireland to more than 30 pubs.
Among the Irish buyers who are active this year are the O'Malley / Cooney group which bought the Solas Bar in Wexford St, Dublin for €2.4 million through CBRE as well as The Leopardstown Inn near Sandyford for a sum believed to be about €4.5m.
Supply is expected to increase in the coming months not alone from prospective retirees but also from bank sales. The largest of these is Ulster Bank's Project Coney which comprises a portfolio of loans backed mainly by properties in Northern Ireland but also including 66 pubs of which about 20 are in Dublin. Bidders are expected to include a number of international firms such as Goldman Sachs, Lone Star and Sankaty. The successful buyer is expected to flip on some of those pubs which in turn could present opportunities for smaller investors and prospective pub chains.
John Hughes of CBRE says Dublin suburban pub values are holding their own and have not seen the increases recorded I the prime city centre.
Bill Morrissey points out that many pubs around the country are still not viable and will be sold or converted to alternative uses.
On-trade drink sales fell by 34pc between 2008 to 2012. However since autumn 2013, he adds that "there is growing evidence of a stabilisation and growth in the volume of trade in sectors of the market - principally the main population centres and tourist districts of the country."