Published by Estates Gazette 23.10.25
During recent years, properties occupied by leisure, licensed and food operators have become increasingly popular with investors buying assets at auction. Much of this popularity was generated by the fact that lease lengths in these sectors have remained comparatively long and therefore the security of income has been underpinned.
However, it is also in step with a nationwide trend of a burgeoning Entertainment & Leisure sector. As the table below shows, in comparison with some other business types sectors the number of active Entertainment & Leisure businesses has grown substantially between 2015 and now – in comparison with lower growth trajectories across other prominent sectors
The UK has seen a marked rise in the number of businesses operating within the entertainment & leisure sector including gyms, cinemas, family entertainment centres, bowling alleys, gaming venues, and immersive experiences. ONS data shows that the leisure sector has consistently outpaced GDP growth, driven by robust consumer spending on recreation, hospitality, and live experiences.
NUMBER OF UK ACTIVE BUSINESSES BY SECTOR SAMPLE 2015-2025
|
Sector |
2015 |
2025 |
10-year % change |
|
Construction
|
281,000 |
382,000 |
+36% |
|
Entertainment & Leisure
|
203,000 |
255,000 |
+25% |
|
Retail
|
313,000 |
368,000 |
+18% |
|
Service Providers
|
467,000 |
460,000 |
-1.5% |
|
Manufacturing
|
91,800 |
91,000 |
-1% |
|
Tech
|
148,000 |
135,000 |
-9% |
Source: EvaluateLocate.com
As this collective urge to eat, drink and have fun has expanded so have the property investment opportunities. Of course, the sector has had its problems in recent times with rising costs and outlet closures, but overall, it continues to move forward with purpose.
In this context, it is set for another boost in the wake of the Prime Minister’s announcement last week that pubs and bars in England and Wales could get extended opening hours as part of a government fast-track review of ‘outdated’ licensing rules.
For investors buying at auction, pubs are an interesting case in point as they can offer either solid income secured on an established operator or – because many pubs have a large footprint with car park – they can provide ‘meantime income’ from an existing tenant with longer term potential for repurposing or redevelopment.
A growing desire to eat out or, indeed, on the move continues to create a flow of new investment opportunities. For example at our last auction, a drive-thru KFC leasehold investment with 19-year unexpired lease sold for £1.47m, at a yield of just over 6%.
At the same auction, the freehold of an all-day dining restaurant on Billericay High Street in Essex was sold for £1.13m at a yield of 7.09%. The property had undergone a complete refurbishment and is entirely let to Loungers UK on a new 15-year lease with no breaks at a current annual rent of £85,000.
At our forthcoming October auction another example of the type of assets the sector is generating is a public house in Royal Tunbridge Wells being offered by a major UK fund. With a guide price of £2.4m, The Manor House is let to Marston’s Estates until 2054 with five-yearly RPI-linked rent reviews subject to a 1% collar and 4% cap.
While eating and drinking remain a fundamental part of the Entertainment & Leisure sector, there is a growing trend – particularly among younger consumers – for more activity-based recreation. This has given rise to ‘competitive socialising’ with hybrid licensed environments providing mini-golf, darts, bowling and immersive entertainment. Escape rooms and micro-pubs have proliferated on High Streets and sit beside more intrinsically healthy diversions such as gyms and fitness studios.
From a property perspective, the institutionalisation of the leisure sector has been notable. Historically viewed as a niche or secondary market, it is increasingly recognised as a mainstream investment class. Specialist funds and REITs now actively target leisure assets, with investor confidence reinforced by the sector’s alignment with broader social trends. While yields for prime leisure investments remain slightly higher than for core retail, this yield premium has narrowed in recent years, reflecting improved investor sentiment.
Our ongoing Commercial Property Auction Data (cPad) analysis of the market demonstrates the positive change in sentiment towards this sector. The cPad Average Leisure yield is standing at 7.84% – 106bps stronger than the cPad Average Retail yield which is 8.90%. In terms of sales volumes, leisure assets accounted for 15.4% of the total amount realised last year.
Thanks to the diversity of assets that flow through our auctions, there is an opportunity for the private investor to participate in this trend. Investors who perhaps traditionally focused on retail and office assets have increasingly turned towards leisure-led properties as a means of diversifying portfolios and capturing stable income streams from consumer-driven businesses.
Ultimately, the expansion of the Entertainment & Leisure sector during the past decade reflects a broader societal evolution toward experience-led consumption. This trend is reshaping the demand patterns for commercial property investment in the UK with Entertainment & Leisure-backed assets providing an attractive alternative to High Street properties occupied by national retail multiple brands which historically had been the go-to investment for private investors.
As operators continue to innovate and diversify, and as investors seek exposure to resilient, consumer-driven income streams, properties occupied by entertainment and leisure businesses are likely to remain a key component of investor strategies.
Richard Auterac is Chairman of the specialist commercial property auction house, Acuitus and Chairman of the RICS Real Estate Auction Group
