Pub sales increase more than 130pc in strong 2014
NEARLY 50 pubs changed hands last year in Dublin the busiest year for the sector since 2006, as the sector began to clowly rebound from the depths of the property crash.
According to a report from pub and hotel specialists Morrisseys, there were 46 pubs bought and sold in the capital in 2014 - an increase of 130pc year on year.
While the churn rate remained low, it marked a positive step for a sector that has lost about 34pc of its trade since the peak of the boom.
The capital value of the transactions in the Dublin market increased almost 250pc from €15.09m to €52m during the year, in a sign that value may be returning to the market.
The average sales price in 2014 increased by €380,000 to €1.14m, reflecting both a greater volume of licensed premises transacting and stronger purchase prices being achieved when compared to previous years, said the report
The report makes clear that while sales have increased, location is still the key to a successful business.
"Demand as always from purchasers was for licensed premises which are well located with and established population and good transport links, whether they are located in city centre, or suburban locations," said the firm's Rory Browne.
"These licensed premises which usually enjoy a good population mix, that is a good combination of residential, office and retail, enable operators to enjoy a throughput of business throughout the day and evening, driving the volume of business enjoyed and in turn economies of scale and profitability.
"However licensed premises that are located in trading fringe areas or do not enjoy an optimum Floor Plate and a viable business model did not fare well," he added.
The market forces that prevailed in the Dublin Market were mirrored generally speaking in the provincial market, the report claimed.
The provincial rural market was harder hit when compared to city and large town locations with continued reports of closures of licensed premises, the bulk of which have been located within sparsely populated districts with an oversupply of competing licensed premises as it stands.
Looking ahead, Morrissey's expect the improved market sentiment which played a valuable role in the emergence of a recovery in 2014 to continue throughout 2015 which should further promote market confidence and in turn regenerate activity.
"This renewed stabilisation will further benefit business that are now emerging from a most difficult trading environment and which are beginning to enjoy and sustain a maintainable level of trade.
"Importantly there are an increased number of funded purchasers (both through financial institutions and personal funds) that have entered the market over the past 24 months seeking quality business in key trading locations which naturally bodes well for both operators and the market place on the whole," the company added.
"Over the past 18 months there is growing evidence of a stabilisation and growth in the volume of trade enjoyed in certain sectors of the market - principally the main population centres and tourist districts of the country.
"This stabilisation and growth has led to increased market confidence in ascertaining the volume of trade that could be sustainable over the short to medium term and in turn has underpinned market valuation.
Despite the improvement, Morrissey's makes clear that there is still oversupply in the market.
In real terms there is a rationalisation of the licensed trade industry on the whole with many businesses ceasing to trade, with others struggling and continuing to experience a further reduction in sales. This is borne out with the majority of the activity in the market place to date being distressed sales, the firm adds.