COVID boosts demand for Bunnings from large and small investors

Private investors and major property players are increasingly targeting Bunnings properties, as the hardware retailer’s strong performance during the coronavirus pandemic cements its investment appeal.

Several Bunnings warehouses have changed hands this year as large and small investors chase resilient assets with long leases to strong tenants that have performed well during COVID.

In June, a Melbourne family paid $22.2 million for a newly-opened Bunnings warehouse in Plainland in Queensland, buying it sight unseen.

Burgess Rawson director Billy Holderhead, who managed the Bunnings Plainland sale, said Bunnings’ reputation drew considerable interest from investors due to the fact it was a stable, long-term tenant and a well-performing business.

“Investors are looking for strong tenants that have done well through COVID,” Mr Holderhead said.

“Even though Bunnings is not really an essential service, they were open to trade customers during COVID.

“In Victoria, they were pretty much locked down in the metro area for the best part of five months but still the strength is absolutely unbelievable.”

People spending more time at home and doing projects at home translated into strong sales for Bunnings in the half-year to 31 December 2020, when its same-store sales grew by 27.7% and earnings before tax rose almost 36%. Wesfarmers, which also owns Officeworks and the Kmart Group, reports its annual results in late August.

Bunnings stores in Greater Sydney have remained open during its lockdown so customers and tradespeople can access products for emergency repairs and maintenance.

Mr Holderhead said the confidence investors had in businesses like Bunnings was evident in the Plainland auction in June when eight of the 13 bidders were locked down in Melbourne.

“All these guys were stuck in Melbourne and couldn’t get up to look at it, yet they were still bidding,” he said.

“That gives you a sense of the confidence people have in Bunnings. They were going hammer and tongs $20 million and above on something they hadn’t seen before, and these were mostly private families.”