Cover section_08 8/1/08 11:00 Page 1 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY www.christiecorporate.com Business Outlook 2008 Market Intelligence 2007 Business Outlook 2008 Market Intelligence 2007 Christie + Co AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY www.christiecorporate.com Cover section_08 8/1/08 11:00 Page 2 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY www.christiecorporate.com 22 11 19 20 21 27 26 25 24 23 18 INTERNATIONAL OFFICES 11 London 23 Madrid 39 Victoria Street María de Molina, 37 Bis, 3a Planta London SW1H 0EU 28006 Madrid, Spain T: +44 (0) 20 7227 0700 T: +34 912 99 29 92 F: +44 (0) 20 7227 0712 F: +34 912 99 29 91 E: [email protected] E: [email protected] 18 Barcelona 24 Marseilles Paseo de Gracia, 11, Esc B, 4O 3a 165 avenue du Prado 08007 Barcelona, Spain 13008 Marseilles, France T: +34 93 343 61 61 T: +33 (0) 4 91 29 12 40 F: +34 93 343 61 60 F: +33 (0) 4 91 29 12 41 E: [email protected] E: [email protected] 19 Berlin 25 Munich Markgrafenstraße 32 Platzl 3 10117 Berlin, Germany 80331 Munich, Germany T: +49 (0) 30 / 2 0 00 96-0 T: +49 (0) 89 / 2 00 00 07-0 F: +49 (0) 30 / 2 0 00 96-10 F: +49 (0) 89 / 2 00 00 07-10 E: [email protected] E: [email protected] 20 Dusseldorf 26 Paris Königstraße 10 25 rue d’Artois 40212 Dusseldorf, Germany 75008 Paris, France T: +49 (0) 2 11 / 54 25 68-0 T: +33 (0) 1 53 96 72 72 F: +49 (0) 2 11 / 54 25 68-10 F: +33 (0) 1 53 96 72 82 E: [email protected] E: [email protected] 21 Frankfurt 27 Rennes Bockenheimer Landstraße 93 Immeuble “Artemis” 60325 Frankfurt, Germany Parc Monier T: +49 (0) 69 / 90 74 57-0 167 Route de Lorient F: +49 (0) 69 / 90 74 57-10 35000 Rennes, France E: [email protected] T: +33 (0) 2 99 59 83 30 F: +33 (0) 2 23 46 08 95 22 Hamburg E: [email protected] Stadthausbrücke 7 20355 Hamburg, Germany T: +49 (0) 40 / 4 68 99 01-10 F: +49 (0) 40 / 4 68 99 01-20 E: [email protected] LOCATIONS www.christiecorporate.com Contents Introduction . 04 Agency . 10 Valuation Services . 12 Investment . 14 Consultancy . 16 Finance & Insurance . 18 UK & International Offices . 20 Sectors . 22 Hotels Public Houses Restaurants Leisure Care Retail page 22 page 28 page 34 page 38 page 44 page 50 International . 56 France . 58 Germany . 60 Spain . 62 Contacts . 64 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY 2007 6.1% 2007 6.5% Percentage 13.1% 8.5% 2006 2006 10.8% 5.2% movement in 2005 2005 2004 10.9% 2004 9.2% 11.6% 6.2% average prices 2003 2003 2002 4.2% 2002 8.1% 0% 5% 10% 15% 0% 2.5% 5% 7.5% 10% Hotels Public Houses 6.1% increase 6.5% increase Christie + Co price indices Index based on average sale prices (from a base of 100 in 1975) 1975 2002 2003 2004 2005 2006 2007 Hotel Index 100 623 695 771 854 966 1025 Public House Index 100 709 753 822 865 939 1000 Restaurant Index 100 816 837 865 906 950 1026 Care Index 100 487 579 677 775 910 1021 Retail Index 100 699 828 865 933 988 1043 Christie + Co Average Index 100 710 792 863 937 1021 1099 Retail Price Index 100 457 469 484 497 516 538 House Price Index 100 1057 1227 1411 1458 1598 1708 2 www.christiecorporate.com 2007 8.0% 2007 12.2% 2007 5.6% 2006 4.9% 2006 17.4% 2006 5.9% 2005 4.7% 2005 14.5% 2005 7.9% 2004 3.3% 2004 16.9% 2004 4.5% 2003 2.6% 2003 18.9% 2003 18.5% 2002 2.8% 2002 3.2% 2002 5.4% 0% 2.5% 5% 7.5% 10% 0% 5% 10% 15% 20% 0% 5% 10% 15% 20% Restaurants Care Retail 8.0% increase 12.2% increase 5.6% increase 1800 1700 1600 1500 Hotels 1400 Public Houses Restaurants 1300 Care 1200 Retail Christie + Co Index 1100 Retail Price Index 1000 House Price Index 900 800 700 600 500 400 300 200 1991 2001 1987 1997 1992 1985 1993 1984 1995 1988 1994 1990 1986 2007 1989 1998 1996 2002 1999 2003 2005 2000 2004 2006 3 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY The crisis in the US sub-prime mortgage market has been well documented and although it has caused concern in the property markets, values within our sectors all showed positive growth during 2007. Analysis of our own sales shows that, across our sectors, average business property values moved forward by 7.1% during the year. Average property values increase during 2007 During the first half of 2007, the business Average property values within the hotel property market moved forward very sector moved forward by 6.1% during 2007, positively, as forecasted, providing early whilst in the pub sector they increased by indications of another strong year. Towards 6.5% and in the retail sector by 5.6%. the latter part of the year we witnessed a Restaurant values showed an 8% increase, smoothing of these growth levels, as a result which compares favourably to the 4.9% we of the uncertainty in the debt market, but reported for 2006. The care sector reported values within our sectors still showed a the greatest increase in prices at 12.2%. Whilst positive gain for the year as a whole. the rate of increase has declined in most sectors, when compared to the impressive growth we witnessed in 2006, we are still recording a positive increase, not a fall in property values for 2007. “Property prices continued to move forward at encouraging levels” CHAIRMAN’S OVERVIEW 4 www.christiecorporate.com CHAIRMAN’S OVERVIEW A return to sound financial principles Taxing issues International interest The forecast for 2008 is a return to financial In October 2007, the Chancellor announced a In general, our markets are becoming normality, where buyers of businesses are number of changes to the tax system that will increasingly global and the UK continues to required to put in a real equity stake — affect business owners. The most significant be a focus for property investors throughout typically 25-30% of the transaction value. change is a potential 80% increase in the the English-speaking world. Over the past few Over the past few years, as asset values have Capital Gains Tax, payable for disposals after years, international investors have struggled significantly increased, many business buyers 5th April 2008. The Chancellor intends to to compete with UK investors in a competitive have secured funds against the uplift in value abolish Taper Relief, which currently reduces bidding environment, other than for major of existing assets held. In the future, it is the tax liability for many business owners. portfolios and trophy assets. However, the likely that the equity stake put in by the Vendors of businesses, who have owned a slight slowdown in the pace of recent buyer will need to be a cash investment. qualifying asset for more than two years, transactions may create opportunities for For the individual private business purchaser, are in general, currently charged 10% tax international investors to complete asset this represents a return to sound financial on any gain they make from selling their acquisitions they might otherwise miss. principles. Our own intermediary, Christie business. From April 2008, when Taper Finance, reports a continued healthy appetite Relief is abolished, it will be replaced The House Price Index amongst the banks, for transactions funded with a flat rate CGT of 18%. The House Price Index showed a 6.9% in this way. increase in residential property values during As Business Outlook went to press, we 2007, compared with a 9.6% rise in 2006. REITs to emerge in the future were waiting for the Chancellor to clarify However, the trend we have witnessed in The appetite for REITs in the business the position of any retirement reliefs or recent years is for fewer novice business property sector was marred by the poor concessions for long-term business owners. operators to enter our markets — other share price performance of mainstream If these concessions are insubstantial, or than in the retail sector. For this reason, commercial property companies, which had arrive after the first weeks of 2008, we we believe that the market for the sale chosen to convert to REIT status. The failed believe we will see many long-term business of businesses is less susceptible to attempt to launch Vector as a hotel REIT owners seeking to realise their investments fluctuations in the residential market, arguably deterred other would-be early prior to the April deadline. from which first time buyers would entrants. We believe, however, that there normally obtain their seed corn capital. is a place in our markets for REITs and that Cautious corporate funding these will emerge as new funds are raised In 2008, we believe that the banks will Looking forward to 2008 for both the pensions industry and retail approach lending on the basis that they Businesses within our sectors have generally investors in the years ahead. are lending their own money. This will responded well to the challenges they have result in careful underwriting and a possible faced during 2007. We predict that we will continuation in the trend of offering witness a return to a more normal market syndicated pre-arranged finance when for business sales after the previous bull run.