This article is from the Australian Property Journal archive
AUSTRALIA’S slow uptake of electric vehicles paved the way for more than $1 billion in sales of petrol station properties in 2022 – more than 50% higher than the previous year – although some operators are beginning to pivot their stations in a bid to modernise the offering.
For now, the stable income streams of petrol station assets remain attractive to savvy buyers. Ray White research shows the $1 billion-plus that changed hands last year was far and away higher than any of the past five years – despite an overall drop in commercial property transactions. In the latest Australian Property Journal Talking Property podcast, Benjamin Martin-Henry, head of real estate research, Pacific with Real Capital Analytics (MSCI) discussed the outperformance of alternative sectors compared to core sectors such as office, industrial and retail.
Interest in fuel stations continues to come from experience investors, developers, and private syndicates, who are looking to take advantage of the corrections in yields, as many first time buyers who were instrumental in lowering yields over the past few years have now left the market, according to Ray White’s head of research, Vanessa Rader.
Yields in 2022 averaged 5.9% within a broad range from as low as 3.9% upwards to 10%, an increase on 2021 low-interest-rate-fuelled 4.4% which has. This is an increase on 2021 results, fuelled by low interest rates, where the average sat at 4.4% for metropolitan assets and 5.1% for regional assets.
“This correction is likely to see the need for some owners to bring their assets to the market which will add to the portfolio transaction activity anticipated in 2023,” Rader said.
Service stations have been a fixture of portfolio auctions in recent years, with private buyers bidding properties down to tight yields, while institutional players such as Charter Hall have been buying into major portfolios.
Petrol station assets have evolved to include greater food and convenience offerings, growing the average custom time as the demand for electronic charging was anticipated to change the way in which service stations were interacted with, Rader said.
Only 3.4% of new car sales to September were EVs or hybrid according to the Electric Vehicle Council; this marked a 65% increase on 2021 but Australia overall continues to lag behind much of the world.
The slow delivery of vehicles, limited fast charging facilities, and overall rising cost of energy, are yet another roadblock in the rapid rollout of these vehicles which currently only account for an estimated 0.3% of the total registered vehicles on Australian roads.
However, operators such as Ampol and BP are starting to offer fast charging stations within their establishments. The most rapid charging still takes at least half an hour, likely to extend the need for comfortable and enticing food, retail and entertainment options within service stations.
Petrol stations sites are often main road and corner locations, also making their development potential high after remediation and creating possible exit strategies for owners.
