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Market Insights

06.05.2019

Brand New 7/11 in Werribee SOLD for $5,930,000 as Petrol Stations are Still Pumping with 186 Projects Scheduled for Completion in 2019

Despite continued headwinds about electric vehicles making their way into the mainstream private car market, recent research by CBRE shows a strong supply pipeline over the next 2 years for Petrol station investment properties.  Whilst the largest amount of projects are underway in Queensland (58) both Victoria (43) and NSW (38) also have strong shares in the 186 new petrol stations to be built over the next 12 months.

CBRE’s petrol station specialist Joseph Du Rieu acknowledged that an increase in supply like this would usually see some pressure come of prices, however, given not all of these new developments have come flooding to the market pricing has remained steady or slightly in favour of vendors.

“The key take-out we see in the amount of new projects coming on line is the confidence that these major companies are putting in to the sector where they typically look to enter into 15 year leases on the sites which has resonated very well with the investor market” explained Mr Du Rieu. 

This is further supported by the CBRE’s teams very recent transaction of a brand new 7/11 Service station which transacted for $5,930,000 on a yield of 5.04%. The newly built service station had 15 year net lease plus fixed annual increases which attracted both domestic and international buyers to the property.

“We are continuing to see a strong level of demand from both private and institutional investors for these products, the most notable of which is the recent sale of the 7-Eleven in Werribee for $5,930,000 to a private Melbourne based investor on a yield of 5.04%”

“Given the growth, security and prominent land holding that is typical for these properties and the modern technology around the environmental aspect it is common that investors who take a very long view on the matter believe the sites will lend themselves to alternatives uses of retail or commercial nature in the future”

Private car transport continues to be the most popular means of getting from A to B in Australia with 66.1% of Australians either driving to work in a car or being a passenger in a private car an increase from 65% in 2011. What this show is that although it is anticipated that the proportion of Electric Vehicles in production in Australia may reach 50% by the 2030s there is clearly going to continue to be a strong need for petrol filling stations as this is expected to translate to less than 14% of cars on the road being Electric Vehicles.

However this has been enough to see a shift in the way major energy companies are operating with Shell being one of the first to make a move.  Shell in the past 12 months have installed fast charging terminals at 80 Shell Petrol Stations across, the UK, Netherlands and China offering a Shell Recharge service that charges an electric vehicle in just 30 minutes. 

“with the potential future implementation of fast charging services in Australian Petrol Stations it is likely that the operators will continue to grow their retail offering to build on the service they can provide their customers while they charge their cars”

The below provides a summary of petrol station investments sold In Australia in the first quarter of 2019 with close to $40,000,000 of investments sold it is clear that tier one tenancies like Coles Express and 7-Eleven are still attracting strong yields of less than 6% in the event they are located in strong inner metropolitan locations with strong underlying land components.

The CBRE Freestanding Retail Investments team have been responsible for the sale of 4 petrol station investments in 2019 totaling more than $23,000,000.

“We have seen growing interest from both the domestic private investor market and the international buyer market particularly those of Chinese heritage, especially given the long term security associated with the leases.” Kevin Tong noted.

“The modern nature of the improvements and the Net lease structures that are typical to these investments have been popular providing depreciation benefits and a secure income stream for their families”

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