Why investing in highways is a good idea

Thursday 28 July 2016

Written by Dean Venturato

On top of a good location, a good commercial investment is often characterised by a secure lease preferably to a national tenant.

In Australia, we love our road trips and because of the expansive nature of our urban layout, driving is a necessity and highways are preferred to get to our destination quickly and conveniently.

Commercial properties such as service stations, fast food outlets and large format retail outlets located on highways are popular with customers due to the convenience they offer.

These high profile main road sites often boast secure long term leases to large brand name chains, generally multi-national corporations.

Additionally, fast food operators and service stations rarely vacate well located sites due to the large capital investment in their fit out. However, if a tenant does vacate there are future alternate uses as highway sites are desirable locations for other big name chains who often compete to secure prime located properties to occupy.

The fast food and service station industries are perceived to be near recession proof as irrespective of economic conditions, fast food and service stations are considered necessary to continue our way of life. For example, in an economic downturn the Australian public will continue their frequency of visits to fast food outlets and fuel purchases are a necessity for getting around.

For investors, many of these sites provide attractive income brackets (generally between $100, 000 to $300,000 pa). Investors also benefit from tenants generally bearing the responsibility of paying the outgoings of the property as well as maintaining the property themselves.

Burgess Rawson are specialists in marketing highway located investment properties and regularly offer them for sale through their investment portfolio auctions.

Recently, Burgess Rawson sold a Caltex services station on the New England Highway in Rutherford for $5,050,000 on a yield of 6%. This result reflects an 18.5% increase in the sale price compared to its previous sale which was less than two years ago for $4,260,000.

To learn more about highway investment opportunities feel free to contact Dean Venturato on 0412 840 222 or dventurato@burgessrawson.com.au