A total of 23 licensed premises in Dublin were sold for a combined total of €51.5m last year as publicans reemerged as purchasers in the property market, Lisney has found.

Transactional activity witnessed in 2022 was in line with the 10-year average following a peak in 2021 when 30 licensed premises were sold for €124m as private equity emerged as a major acquirer.

The proportion of private equity purchasers of licensed premises in the capital fell from 37% and 73% of the value of transactions in 2021 to 4% in 2022 when private equity factored in to just one deal.

In its place, the traditional base of publican purchasers reestablished itself, reflecting growing confidence in the outlook for the trade, accounting for 48% of volume and 37% of value, up from 37% and 15% in 2021.

The investor category also had a significant uplift with percentage of volume increasing from 10% to 39% and percentage of value rising from 5% to 36% in 2022.

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Demand for good city premises remained strong and was illustrated through the recent sales of O’Donoghue’s Suffolk Street, Nancy Hand’s Parkgate Street and The Flowing Tide Middle Abbey Street, all acquired by established publican purchasers.

High value sales made up a relatively high proportion of transactions in 2021, with premises such as The Brazen Head in Dublin 8, The TP Smith Group and The Camden on Camden Street changing hands.

Off-market activity has steadily increased in recent years and accounted for 57% of total sales last year, up from 37% in 2021. In terms of market value, off-market sales accounted for 40% of total market value in 2021, rising to 71% in 2022.

Lisney said the licensed premises industry had "remained resilient" and that 2022 had seen the reopening of a number of pubs post-refurbishment and rebranding. The firm said to expect a consistent number of assets being put up for sale in early 2023.

However, Lisney identified staffing, rising utility costs and the reversal of the temporary VAT reduction as challenges to the sector, with staff availability having already fallen significantly in the previous two years.

Staff shortages have had an inflationary impact on labour costs, which is expected to continue in the short term, Lisney said, adding businesses remain concerned in respect of the long-term impact of inflation on profitability and viability.

“We are predicting that there will be good market engagement in the opening months of 2023, while the longer term outlook for the year is also positive with many well established urban and suburban business models reporting a return to past volumes of trade, and in certain instances, businesses exceeding the levels of trade they enjoyed in 2019," Lisney's licensed and leisure team commented.

"Private Equity will feature again in 2023, however, activity from this sector of the market will depend upon the ability to secure the top tier prime assets that meet with their criteria.

"Lisney expects Private Equity investors to turn their attention to regional cities as the volume of prime Dublin premises that could be purchased has diminished following the strong activity witnessed in 2021.”

Licence values remained stable throughout 2022. Values realised at the close of 2021 had risen from a low of €42,500 in Q1 to €55,000 by year end.

Pricing remained relatively flat at an average of €55,000 per licence for the first three quarters of 2022 rising to €60,000 by year end.

Demand remained stable throughout the year with purchasing appetite principally driven by the off-licence sector of the market, which has continued to remain the dominant stimulus of activity.

Lisney projects that future supply of licences is most likely to emerge from premises in lesser populated areas where the business would attract limited appeal due to the model being non-viable with little opportunity to sustain meaningful trade.

In these circumstances, Lisney envisages deliverability of licenses to the market with the vendors ultimately retaining and possibly re-purposing the property for other uses.

Outside of Dublin, it was a quiet year with limited transactional activity in Cork, Galway, Limerick, Waterford and Kilkenny, although demand for leasing was strong while restricted to well populated urban districts and established suburbs and commuter towns.

Notable transactions were the former Electric and Halo premises on Abbeygate Street Galway at €4.5m, O’Gorman’s of Portlaoise at €1m and Bridgewater Sallins at €900,000.

Activity in the provincial rural market was depressed and characterised by closures of non-viable businesses in sparsely populated rural areas, and Lisney predicts the provincial market will continue to struggle "with limited appetite expressed from outside of the local indigenous community."

(Pic: PAUL FAITH/AFP via Getty Images)