As agent John Hughes of Gunne says: "There is no indication that prices are going anywhere other than up." "This year, the market was a bit slow to start. The demand is there. But the supply is not, and that's across the board. Prices are rising as a result, "says John Hughes about the Dublin pub market.
According to Mr Hughes, there were 62 pub sales in Dublin last year with an average sale price of £1.5 million. That compares with around 40 pub sales in previous years with an average price in 1994 of around £500,000.
"There have been between 20 and 25 pub sales so far this year, and the market appears to be heading for the same turnover levels as last year. Most of the demand is coming from existing publicans looking to buy a second/ third pub and others trading up. This means it's very difficult for first-time publicans to get into the market," he says: Paul Collins of HOK believes that many of the traditional ways of valuing a pub, such as its turnover, have "gone out the window". He says: "Some of the prices paid for pubs recently have been stunning. In previous years, you would typically pay 1.5 times turnover. Now, it can be anything up to and over four times the turnover.
"The trend has been for very few large pubs to come on the market while existing pubs have been trading well. As a result, existing publicans have the money and are anxious to acquire new units. There has been a rush of demand and prices in some cases have gone sky high."
One of the highest prices paid recently was for McDaids, on Harry Street, Dublin, which made £2.9 million, or 4.7 times turnover. Three former Guinness pubs - The Sheaf O' Wheat, near Coolock; The Cherrytree, Walk instown; and The Clonsilla Inn - made a combined price of around £12.5 million last year.
This year, The Hill, in Ranelagh, sold for 3.5 times turnover and The Rathcoole Inn was believed to have made around £2.25 million, or 2.7 times turnover.
Important sales coming up include The Blue Haven, in Templeogue, which is to be sold on July 9th with a guide price of £2.5 million-plus on a turnover of £700,000. The Polly Hops, in Lucan, is expected to make in excess of £3 million. Paul Collins says there has been a "shift" among some Dublin publicans to satellite areas just outside the capital. "The Paddocks in Naas made an incredible price of £2.7 million on a turnover of £700,000 recently."
John Young of Youngs says pub licences are changing hands for £500,000 on average. "However, they can only be moved up to around 1,000 yards from the existing pub and this is very restrictive."
John Hughes says licences, depending on their transferability, cost between £300,000 and £700,000. "You used to be able to move the licences about 500 or 600 yards, but the old Premier Bar, in Meath Street, was allowed to move to South William Street, which is quite far."
Another factor likely to increase values is the apparent reluctance of planners to allow more super-pubs in the city centre. Given this, one source said it would be "interesting" to see how the planners deal with applications to build large pubs by Paul Keaveney, of The Odeon Bar in Harcourt Street, at Dame Lane, and another by John Reynolds, of The POD fame, on Fade Street.
The trend of building at least a 20-bedroom hotel above a bar, acquiring a hotel licence, buying a country pub licence for the new hotel bar and then moving on the original pub licence to new premises has slowed somewhat in Dublin.
This was popular for awhile, especially given that country pub licences could be acquired for around £50,000 - far less than an average pub licence in Dublin.
According to Paul Collins: "A lot of hotels in Temple Bar have done this and it's a fairly common practice. Even though the transfer of the licensing is not difficult, it's becoming increasingly problematic to find a new pub premises nearby and then you still have to go through the planning process for approval."
Mr Collins also says the number of leasehold pubs, such as Pravda and Zanzibar, is increasing all the time. "These are popping up all over the place," he says.
Looking to the future, John Young says he expects current levels of demand to be maintained "as long as interest rates are as good as they are now". He believes the current market is conducive to publicans to expand and increase the size of their premises, even "given that the supply of pubs has increased with the creation of 30 or so new hotels over recent years in Dublin".
