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Holiday park ‘staycations’ on the up

Harry Stott reveals a strong outlook for the sector with the £1.2m sale of a Scottish caravan park.

At the end of 2018 we were involved in the sale of Doonpark Holiday Park near the small village of Kippford in Dumfries and Galloway in south-west Scotland. A successful family-run business for 50 years, it is a popular destination for holidaymakers with a high percentage of long-established residents passing on their pitches to the next generation.

After being placed on the market in June 2018, Doonpark, which extends to about 10.75 acres (4.35 hectares) and is licenced for 154 units, enjoyed a significant level of interest from established national park operators looking for an opportunity in a renowned holiday destination. There was also interest from local operators and new entrants into the market who sought an opportunity for a new venture or a change to their work/life balance with the benefits of living in beautiful surroundings and the prospect of taking on an established and popular business.

The sale, which also included a well appointed four-bedroom house, with 10 offers received the sale was completed at an offer in excess of the £1,200,000 asking price, and was sold to a local operator with a similar ethos and vision for the park as the sellers.  The level of interest in the park demonstrates the strength of the market in the holiday park sector which has been largely brought about by the circumstances surrounding Brexit.

The Brexit effect

The UK’s withdrawal from the EU has dominated the headlines with many commentators predicting a significant detrimental impact on the UK economy. Conversely, the leisure and holiday park market has remained resilient to the challenges in the wider economy. The fall in the value of the pound has actually made the UK a more affordable holiday destination for overseas visitors and UK residents alike.

Accordingly, many holiday and caravan parks reported improved trading conditions, which in turn underpinned values.

Weather implications

The weather does play a part in determining the outcome of a trading season and holiday parks located in Scotland are arguably more sensitive to climatic variances than the rest of the UK. The sector got off to a slow start with the arrival of the “Beast from the East” but was given a boost with the record-breaking summer of 2018 that followed.

Increased market activity for holiday parks

There has been an increase in market activity for holiday parks across the UK with corporate groups adding to their existing portfolios. However, the industry is fragmented with a reasonably large number of purchasers seeking to buy smaller parks. These tend to be new entrants after a lifestyle change following the sale of another small business or residential property.

This, coupled with more availability of funding, has led to greater confidence and projected trading conditions. Interest in holiday parks is predicted to be strong through 2019 as demand outstrips supply by a significant margin. The demand is further enhanced by the banks reacting favourably to the sector where they can see growth. The outlook for the sector is good and demand is strong at all levels and sizes of parks in established and popular holiday destinations.