New South Wales pub market exploded in 2014

Figures have been released that show $650 million worth of transactions in the New South Wales pub market were completed in 2014.

The biggest contributor to that figure was JLL Hotels & Hospitality Group who were involved in 27 transactions resulting in $342 million worth of New South Wales pub assets changing hands in 2014.

It resulted in JLL Hotels & Hospitality Group attaining over 50 per cent of the market share for all New South Wales pub transactions last year.

Director – Investment Sales JLL Hotels & Hospitality Group John Musca said, “pubs are trading very strongly… The pub market in NSW is experiencing a high level cash flow, complimented by low interest rates, combined with a big difference between the cash rate and the cost of debt, making the buying and selling of pub assets very attractive.

“The capital markets are awash with money, there is more liquidity in the market and there has been relative legislative calmness around the country,” he said.

The eastern suburbs of Sydney have been particular mobile in the market. The biggest transactions included the Bondi Hotel for $43 million, the Golden Sheaf Hotel in Double Bay for $41 million, and the Bull Hotel in Bondy Junction for $25 million.

Mr Musca said there were a variety of people jumping into the market.

“Investors in the capital markets want a foothold in the pub market, some family businesses want to downsize to free up some cash, while other private investors are looking to expand their portfolio.

“The market has changed remarkably in the past 12 months with the big transformation being that the top end of the market where industry players are now active due to confidence in the financial sector and limited opportunities to invest in other aggregate models,” he said.

Since 2008 the market has continued to fluctuate from a variety of reasons resulting in a number of operators exiting the market both voluntarily and involuntarily.

Mr Musca believes that 2015 will result in a similar market to last year but believes yield compression in some states will lead to higher prices.

The New South Wales Government is currently reviewing its gaming tax which could affect pub revenues later in the year.