Business property shortage to continue in 2016

The increase in average prices across all sectors, which is weighted by sector according to transaction volume, was an encouraging 9.0% and Christie & Co predicts that the value of businesses across the medium term will continue to rise and outstrip pre-recession levels, in line with any increase in their profitability.

With the exception of the Care sector, values largely recovered to pre-recession levels over 2015. Encouragingly, merger and acquisition activity has been evenly spread across all the business sectors covered by Christie & Co – Retail, Hotels, Restaurants, Pubs, Care, Childcare and Medical. This is one key differentiator between 2015 and 2014, when the Hotel market was hectic 'but other sectors weren’t to the same extent'.

Chris Day, Global Managing Director of Christie & Co, says:

“Throughout 2015, activity continued at a consistent pace, particularly in terms of value, with prices still moving forward albeit not at the same speed as 12 months ago, particularly within the Hotel market. Though we expect values to rise in the medium term, there are still areas of uncertainty in several of our sectors caused by factors such as the National Living Wage. The Care market in particular is exhibiting some caution due to this announcement.”

The largest increase was seen in the Retail sector where the convenience retail property market was resurgent, particularly in the forecourt sector where a severe lack of supply heavily impacted. Multiple offers on each sale were almost expected, resulting in robust pricing, and Christie & Co expects this to continue.

David Rugg, Chairman of Christie & Co added:

“As we start a new year, as an industry, we are faced with a number of legislative processes which will have an impact on all of the sectors that Christie & Co covers. Whilst the implementation of the National Living Wage will undoubtedly create challenges within certain sectors, it would appear that most operators are proactively tackling it and drawing up inventive plans to limit the impact on their businesses.

“Relatively subdued volumes coming to the market in 2015 created a scarcity of assets in the private owner-operator market that further fuelled price growth, while continued low interest rates and an improved lending environment created an appetite to acquire. This disparity between supply and demand looks set to continue in 2016 alongside a gradual increase in single asset transactions.”