Pub and restaurant property values will resist the slowdown in residential and commercial property prices this year, as demand will outstrip supply for quality locations, experts have predicted.
While the number of pubs in the UK is declining, the competition for high-quality properties in locations with a strong trade will intensify, forcing freehold prices to rise, according to Christie & Co.
Chris Day, managing director at the property agent, said: "There is evidence that freehold pubs sell for pretty heady prices as supply of freeholds shrinks. Punch and Enterprise have bought a lot of freeholds and are converting them to leases. We believe the lack of stock will continue to drive freehold prices."
Pub property prices rose by 6.5% during 2007 - a decline from the rise of 8.5% in 2006 - but Neil Morgan, director and head of pubs at Christie & Co, said this drop could be largely attributed to Punch flooding the market with a number of underperforming pubs.
"What we found when Punch put 637 pubs on the market was that it did have an effect on getting premium values," he said. "Significant premiums on good sites with good locations can be achieved, and we will see premium levels rise again in 2008."
The property market for high-street restaurants will remain strong, meanwhile, as businesses seek to expand existing concepts, international operators come to the UK and coffee outlets continue to thrive, according to Christie & Co.
The restaurant sector was the only part of the hospitality industry to see a year-on-year price rise in 2007, up by 8% compared with a 4.9% rise in 2006, and this will continue in 2008, Day predicted. "Restaurant companies will look to expand into secondary towns, while sites with outside areas will be popular," he said.
By Christopher Walton
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