Wednesday 11 December 2019

Pub market returning to normal - Morrisseys

The Swiss Cottage in north Dublin was among 39 sales completed during 2015.
The Swiss Cottage in north Dublin was among 39 sales completed during 2015.
Swiss Cottage, Santry

Peter Flanagan

The value of pubs changing hands fell last year, in a sign that the market may be returning to normal after years of distressed sales.

In its review of 2015, pub and hotel specialists Morrisseys said that 39 pubs worth €43.33m changed hands in Dublin during the year.

That compared to more than €50m 12 months earlier.

The slide in the value of deals however indicates that the market may be appearing to revert back to a more "normal" state after years of upheavel.

"The 39 Licensed Premises changed hands within the Dublin market which reflects 5.34pc of the total population of Dublin Licensed Premises, this compared to 6.3pc in 2014 and while a reduction in activity, it was more in line with normalised activity of 4pc compared to the lows of less than 1pc for the five year period to 2012," said the firm.

While the bulk of sales have since the crash have been carried out by receivers, that has begun to change.

"For the past 8 years activity in the market place has been predominantly distress sales due to a reduction of trade and unsustainable debt.

"However resulting in improved market conditions and an increase in values to a more normalised level, owners of business that have been contemplating retiring from the licensed trade over recent years have begun to bring their properties to market with successful outcomes.

"This trend we expect to continue over the short to medium term," Morrissey's said.

Overall, the agents paint an optimistic picture of the state of the pub market at present, with demand now beginning to revert to past levels. Despite that, there is a growing split between what Morrissey's call "viable" businesses and therest of the market.

"In real terms there is a rationalisation of the licensed trade industry on the whole with many businesses having become non-viable and ceasing to trade, with others struggling and continuing to experience a further reduction in the volume of trade enjoyed.

"It is now widely recognised that there is an oversupply of licensed premises nationally and that continued consolidation will remain a factor of the market and will ultimately contribute to a recovery of the industry on the whole.

"This is borne out with the majority of the activity in the market place to date being distressed sales.

"Generally speaking licensed premises that are well located in populated districts are naturally better positioned to be economically viable in the future.

"However licensed premises that are located in an area with an oversupply, or trading fringe / sparsely populated district or business premises that do not enjoy an optimum floor plate and design will continue to struggle," it added.

Notable sales conducted by Morrissey's during the year include the Swiss Cottage in Whitehall in north Dublin.

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