‘Steady’ outlook for property

The company’s Business Outlook Summer 2012 report suggests that economic pressures have subdued the market, but argues that the overall picture is not as bleak as sometimes presented.

Christie managing director Simon Hughes said: “The ongoing crisis in the eurozone and the fears of a double-dip recession in the UK didn’t inspire great confidence as the year took shape. However, while transactional activity has been of the steady variety, we are buoyed somewhat by indications of a possible return of debt funding. One thing that is clear is that the market is still functioning as operators have learned to adapt to what is a ‘new normal’.”

Christie said it had seen a “strong” start to the year, with investors encouraged by new lending schemes. “There have been some encouraging recent signs that some of our lending institutions, including those that remain part state-owned, are coming back to the sectors in which we operate.”



It highlighted a trend of valuations shifting towards past and current trading performance rather than potential, and said it had seen an increase in private equity backing for the hospitality and leisure sectors.

Andreas Scriven, head of consultancy, also flagged up the need for businesses to be focused in their operations. “We have witnessed a separation in performance between well invested and located assets in comparison to assets that offer a non-cohesive and inconsistent product or service offering. Competent owners and operators will have driven significant cost out of their business, but now need to be careful to not compromise asset or service quality which can lead to significant reputational risk.”

Christie singled out pubs as a solid performer in the first half of the year, noting that the ongoing refreshment of estates by pub companies was keeping transactional activity going. “Encouragingly, the appetite for acquisition in the sector has more than kept pace with the volume of disposals,” said Neil Morgan, head of pubs. “This has been especially evident in the regions where small regional pub companies are gaining pub assets and, in turn, local status.” Around 2,500 more pub closures could be expected before the sector reached its natural stock level, he suggested.

Like for like sales in the restaurant sales fell, though some chains were bucking the trend by chasing acquisitions. “The life in the sector was confirmed by a number of sales made by Christie + Co in the regions where, as forecast, independent operators are encouraged by the availability of some funding to enter the sector,” said head of restaurants Simon Chaplin. “While eating out remains something of a treat for UK consumers as the economic uncertainty continues, it is clear that it is one pleasure that consumers are loathe to give up altogether—which offers hope for the remainder of what is likely to be an eventful year.”

To read Christie + Co’s full report, click here.