Few can fail to be saddened by the demise of what has long been one of the great cornerstones of the British way of life - the great British public house. In pretty much every part of the land pubs have been disappearing at a rate of knots over the last decade or so. However, putting our property investors' hats on for a moment it can't be doubted that public house sites can offer an interesting investment opportunity. They are often substantial buildings with land, in prime locations, which lend themselves readily to other uses. In this report we will examine the trend for pubs to be sold off for other uses, and look at what and where the opportunities might be for investors.
According to the British Beer and Pub Association there are now around 48,000 trading pubs in the UK, down from 68,000 thirty years ago. Around one thousand pubs have closed each year over the last few years. This rate of closure is continuing apace with another estimate (from CAMRA, the Campaign for Real Ale) suggesting that around thirty pubs are still closing every week - looked at in cold, hard terms this is a small but not insignificant opportunity for investors.
To give a quick history lesson, the large scale disposal of pubs was initiated by legislation in the early 1990s which was intended to increase competition in the licensed trade. It forced breweries to sell off a proportion of their properties. In more recent times sales have occurred due to the financial issues of the pub owning companies or 'pubcos' who assumed ownership of formerly brewery-owned properties in many cases, plus the general decline in trade.
It is worth noting at this point that pubs can offer a two-pronged opportunity to property investors. Anecdotal evidence suggests that the more usual opportunity is to redevelop the site in some way for an alternative use. However, there is also the less usual, but by no means unknown opportunity, of becoming a commercial landlord of licensed premises.