PUBTRADE:WHEN IS A pub not a pub? When it becomes an apartment block, a supermarket, a neighbourhood centre, new housing or reverts to being a family home, that's what.
With as many as 1,000 pubs outside Dublin having closed in recent years - and up to 600 nationwide in the last year alone - developers have been eyeing a situation where the property value of a pub is greater than its value as a going concern. While premises in Dublin have hit the headlines when sold, there is an increasing movement in the sale of pubs in urban areas outside the capital and in rural areas, but the two are decidedly different markets.
In Dublin, well-known names, such as Dollymount House in Clontarf, the Foxhunter in Lucan, Rosie O'Grady's in Harold's Cross, McGowans on Braemor Road in Churchtown, and the Royal Oak in Glasnevin, have changed hands in the last couple of years.
Dollymount House, sold by CBRE two years ago for over €15 million, was closed by developer Sean McKeon of MKN Developments.
Dublin City Council has granted permission for over 60 apartments on the site but the matter is with An Bord Pleanála.
The Royal Oak was sold almost two years ago to Ellen Construction and now has permission for 85 apartments. Marie Dwyer of Brian Dwyer & Partners says construction of the apartments will start around September with no commercial content.
The Foxhunter was sold last year, also by CBRE, for around €17 million. It still trades as a pub but has the possibility of development on its three-acre site.
Select Retail Holdings (SRH) has developed the former Four Provinces Pub in Ranelagh as a Superquinn store. McGowans in Churchtown also was acquired by SRH - Superquinn - last year. No planning application has been lodged, but it is understood that SRH may redevelop the site for offices, retail and residential.
Rosie O'Grady's was sold for around €12 million. On two-thirds of an acre, the new owners intend to retain it as a pub but may develop some retail on the site.
"Development value and the price of real estate have gone through the roof," says Bill Morrissey of Morrissey's in Dublin.
Where once many pubs passed from father to son, "a combination of high real estate values, changes in planning policy and in part natural progression" have made for a changed situation in the trade. And for rural areas, you can add on the effects of the new drink driving legislation.
"The pub business would not be as profitable in real terms as 10 years ago. Back in 2006, 75 per cent of alcohol was sold on-trade and 25 per cent off; this year, 48 to 52 per cent will be off-trade," he adds.
John Hughes of CBRE says that the number of transactions in the trade is considerably down. Where pubs are sold and continue to trade, the new owner is usually already in the business. Where there is a change of use, planning is the only restriction, he says. Looking at a site, a prospective purchaser will look at alternative use value and calculate whether it would be more profitable than the existing use.
John Younge of John P Younge Auctioneers says the urban pub market is "reasonably dormant" but there is a strong trade for pubs in urban areas with a busy daytime business community and reliable public transport.
"Rural pubs are severely affected by the drink driving laws. But even sporting venues, like golf and yacht clubs, are affected," he says.
PJ Broderick of Broderick Auctioneers in Thurles, Co Tipperary, says the rural pub trade is "in turmoil". Country pubs sold freely up to 2003 but not in the last couple of years.
"A lot of publicans were selling and moving into town; that was when the licence was not worth much. Now that you would get €170,000 to €175,000, a lot close the door and sell the licence. The pub then becomes a private house. It's a good thing in a way," says Broderick. If the pub is in a village, the ground floor might be rented for a hairdressing salon. If there's a car-park, a builder may see it as a residential site.
James Heaslip of Property Partners Maxwell & Heaslip in Galway says there are not many city centre pubs on the market in Galway. Many rural pubs are family owned, not heavily borrowed or rented, so there is not too much pressure on turnover.
However, he says the way forward for pubs is to reinvent themselves. One such pub is Murphy's in Oughterard in Co Galway, which he recently sold for €1.2 million. "It will always be kept as a pub but will concentrate on food more," he says.
"The pub business would not be as profitable in real terms as 10 years ago
