Australia’s pet industry has established itself as a dynamic and lucrative asset class for commercial property investors, driven by strong consumer demand and the enduring affection people have for their treasured companions.

This burgeoning industry presents a unique opportunity for investors seeking reliable income streams and long-term stability. With an increasing number of veterinary clinics and pet care services establishing their presence across the country, the sector is ripe for investment, promising both resilience and growth.

Now valued at $14 billion, the thriving pet sector continues to expand, supported by Australia’s high ownership rate – one of the highest globally. With a population of 26 million people and nearly 29 million pets, including 6.4 million registered dogs, demand for pet-related services has surged in recent years.

According to IBIS World, the pet industry grew by 4.8% per year on average between 2018 and 2023. Australians collectively spend $33 billion annually on their pets, with food accounting for over half (51%) of this expenditure, followed by veterinary costs (14%).

For investors, the sector’s resilience and its ability to cater to enduring consumer needs make it a strong candidate for portfolio consideration. The sustained growth in pet ownership and the essential nature of veterinary services contribute to the sector’s attractiveness, offering stability and long-term returns in an increasingly competitive market.

Veterinary clinics and pet supply retailers also frequently occupy large-format retail spaces, which are becoming increasingly valuable in the current market.

The tightening of yields in 2024 has highlighted the strong investment potential of the broader pet care sector, encompassing not only veterinary clinics but also pet supply stores and related businesses. Yields for veterinary clinics and similar assets have compressed to 5.94%, down from 6.31% in 2023, reflecting increasing investor confidence.

This yield compression reflects the sector’s increasing value and stable performance, making it a solid option for those seeking steady, long-term returns. This trend is driven by the sector’s resilience, rising demand for pet services and products, and long-term growth potential.

In 2024, Burgess Rawson witnessed strong demand for veterinary assets in particular, pushing yields to new lows. Everton Park Vet in Queensland sold earlier in the year with a tight 4.7% return, followed by the Pascoe Vale Vet in Victoria, which transacted in June at a sharp 4.5% yield.

The price point for assets in this industry is highly appealing, particularly for first-time commercial property investors. Over the past 24 months, transactions have ranged from as low as $730,000, with an average sale price of $2,306,069.

The highest sale in this period was the Westbourne Park Adelaide Vet, leased to Australia and New Zealand’s largest vet group Vet Partners, which sold for $5.855 million in August 2023. These price points offer flexibility and accessibility, whether investors are looking to make a smaller entry into the market or secure a premium asset. Furthermore, their long-term tenancies enhance their appeal as premium investment options.

As Australians’ attachment to their pets continues to flourish, the pet care industry is expected to maintain strong demand for services, ensuring long-term stability. Veterinary clinics, in particular, are essential businesses that provide reliable tenants and steady cash flow, backed by high occupancy rates and the increasing need for pet healthcare.

For commercial property investors, this translates to a low-risk investment with the potential for strong returns, both in terms of rental income and capital growth. The industry’s resilience, even during economic downturns, makes it a recession-proof ‘essential service’ asset class, offering stability in uncertain markets.

Trusted Pet Brands

• Petbarn

Petbarn is part of Greencross Limited, Australasia’s largest integrated consumer-facing pet care company. Greencross owns over 130 veterinary practices and over 200 pet specialty stores and achieves annual revenues exceeding $500 million.

• Petstock

Petstock started back in 1995 in the regional town of Ballarat. Since then, it ballooned to become Australia’s second-biggest pet retailer, with 276 stores. The Petstock annual revenue was $208.1 million in 2024. Earlier in the year, the Woolworths-Petstock transaction was approved, conditional on the sale of 41 stores and 25 co-located vet clinics.

PetO, founded in 2006, acquired the sites, adding brands Best Friends, Our Vet, My Pet Warehouse, and Pet City.

• Vet Partners

More than 270 clinics across Australia and New Zealand and wholly owned by Swedish private equity group EQT, which spent more than $1 billion in acquiring the chain in 2023.

• Pets Domain

Pets Domain is a family-owned and Australian-operated business that has grown to include over 50 stores across the Eastern Seaboard and South Australia, with a particular focus on serving regional communities.