The value of pubs sold in Dublin rose by 16 per cent last year, reflecting the increasing demand from developers for large suburban pubs for mixed-use redevelopment.
The capital value of the market increased from €155 million in 2005 to €180.3 million in 2006, according to the latest figures from commercial property consultants Morrissey's. Thirty-seven pubs changed hands in the Dublin market in 2006, compared to 35 in 2005.
The average price of a licensed house in 2006 was also up substantially to €4.87 million, compared with €3.16 million and €4.43 million for 2004 and 2005 respectively.
"The reason for the continued increase in the average sale price in 2006 was threefold: a greater number of higher value units being sold, continued increase in the underlying real estate value of licensed property and a number of licensed premises being sold for alternative use/redevelopment," said Bill Morrissey, director of Morrissey's.
Interest from property developers resulted in 25 per cent of the total market being sold for redevelopment opportunities, he said. The strong economy andlow interest rates, coupled with a booming property market, also helped to underpin the underlying real-estate value of licensed premises, he added.
Slightly more than 8 per cent of pubs sold for more than €14 million last year, compared to fewer than 3 per cent in 2005 and none just 10 years ago when all pubs changed hands for less than €4 million.
While the majority of pubs sold last year - more than 43 per cent - were in the €2-€4 million bracket, more than 16 per cent went for €4-€6 million, while 5.4 per cent sold in the €8-€10 million price range and a further 5.4 per cent were sold for €10-€12 million.
The policy of increased development densities by local authorities continued to attract interest from developers, identifying suitable properties for redevelopment, said Mr Morrissey.
"These redevelopment opportunities were where licensed premises formed part of a potential development site or were a potential independent development site on a standalone basis," he said.
Licensed premises, located within major or growing population centres, enjoy a brighter future than rural pubs, which face challenging times as changes in legislation such as random breath testing hit home, he added.
The fact that there are four times more licences per head of population in Ireland than in the UK could also imply that there are too many licenses in the country, said Mr Morrissey.
"The license population debate is gaining weight, with an increasing number of licensed premises in provincial areas ceasing to trade and in turn disposing of their licenses for extinguishment purposes," Mr Morrissey said.
