Around 6,000 pub closures on the way

6,000 pubs are expected to be sold off and closed by 2012

Further closures are likely in the pub sector as we have only “hit the tip of the iceberg”, according to Christie & Co head of pubs and restaurants Neil Morgan, talking at the SIBA Conference.

Morgan said people should not be surprised to see quite a few more administrations as banks have been taking a large financial hit with the tough market in the pub trade.

For example, Lloyds took a £600m hit on Admiral Taverns.

Declining number of pubs

Christie & Co predicts that by 2012 the number of tenanted and leased pubs will drop to 22,000 from 30,800 in 2008. Freehouses will rise to 20,000 from 17,700 in 2008 while managed pubs will stay at 9,000.

Morgan said he thinks it is likely that 6,000 pubs will be sold off and closed in the next two years.

“As we have said on many occasions the economic conditions have actually hastened the demise of pubs already destined for closure," he said.

“We are seeing a better quality of tenanted stock coming onto the market and, according to our own evidence, pub sales are up 15 per cent compared to last year.

“Our own statistics show pub prices have declined by 29 per cent since the peak of the market in July 2007. We believe we are at the bottom of the curve at this time.”

State of the market

He said 60 per cent of pubs Christie & Co is selling are remaining as pubs, with 75 per cent of people who are buying living within a 10-mile radius.

The managed house sector, he said, will continue to drive the market, with the lack of supply likely to drive values up.

While the “revolving door tenant” remains an issue, pubcos need to ensure they are finding good-quality licensees to fill their vacant pubs.

Michelle Perrett is deputy features editor at BigHospitality's sister publication, The Morning Advertiser.