Restaurant and retail property prices up 11% in 2014

By Gemma McKenna

Published: 19 January, 2015

The restaurant and retail property markets saw average prices move up more than 11% in the last year, according to a report from Christie + Co.

The agent's Business Outlook report for 2015 also showed an 8.6% growth in pub prices in 2014, with changes across the board being driven by increased appetite from private equity, and changing consumer habits.

Simon Chaplin, who heads up restaurant sales at Christie + Co, said British restaurant brands would continue to target international expansion, with some foreign newcomers joining the UK scene. But he did point out there would be "potential for consolidation, as a number of brands falter". He also signalled increased margin pressures as red tape, rents and hikes in minimum wage take their toll.

"The overall value of the restaurant industry continues to grow, rooted in the general improvement in the economy which has bolstered the availability of discretionary income. Today, London chains are chasing regional opportunities where only a few years ago these were considered too risky."

"Whilst traditional restaurateurs may struggle to rival trusted brands - which are able to provide a familiar and reliable customer experience - there's still a market for individual sites, as our transaction volumes testify. Some 82% of Christie + Co's restaurant sales are on behalf of private vendors and activity remained steady in 2014."

On the retail side, the market has bounced back from falling prices in five of the past eight years years to 14% growth in 2014.

Steve Rodell, head of retail, predicted 2015 would see further growth: "Consumer behaviour will help to ensure that the convenience sector grows in value. Supermarkets will compete aggressively to retain market share. We have seen the market turn and can expect more activity and possible growth in property prices.

"While they are still using supermarkets for home deliveries, consumers are increasingly turning to discount retailers and convenience stores for their weekly essentials. It is reported that there are now more than 50,000 convenience stores in mainland UK and the sector is worth £37.4 billion - a growth of 5.2% on 2013," he added.

While the picture is becoming increasingly positive, head of valuations Darren Bond sounded a note of caution: "The majority of valuations completed by Christie + Co in 2014 remain for refinancing purposes and although the proportion of transaction-linked valuations is increasing, we've still got a long way to go before they reach frenetic pre-recession levels."

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