Better Returns, Long Leases
Top tier tenants and sound fundamentals keep fuel and convenience front of mind for investors.
It was a bumper year for fuel and convenience, with Burgess Rawson transacting 32 freehold fuel investments worth $156 million. Fuel remains one of the best value investment classes, and ticks all the right boxes. In this month’s feature article, we talk all things fuel and the compelling reasons to invest in this sector.
Combine essential services such as fuel and convenience, and you have a premium investment opportunity that will attract the attention of every astute commercial property investor. In fact, demand has been so overwhelming that the team at Burgess Rawson continually field questions on when the next opportunity will be to secure these valuable assets. Better returns, long leases and top tier tenants represent a set-and-forget freehold investment with guaranteed rental growth.
With challenges faced throughout the pandemic, fuel and convenience has proven to be one of the more resilient segments of the commercial property sector.
Strong consumer demand continues to provide investors with confidence as private mobility rebounds, the popularity of convenience shopping grows and financial institutions such as Suncorp, NAB and Bendigo Bank display an appetite to fund these assets.
The Australian Bureau of Statistics recorded 20 million registered motor vehicles during the 2020/2021 financial year, of which only 23,000 were electric vehicles. The low uptake of EV’s has come as a result of their higher price point and an absence of meaningful national government subsidies. Meanwhile, Australian’s heavy reliance on their cars has resulted in a strong demand for fuel, despite improvements in public transport infrastructure and ride-share technologies.
Viva Energy reported a 14% increase in retail fuel sales volumes to December 2021. This represents an increase of 13.6% on pre COVID, fuel volumes for Viva.
While the future of electric vehicles will slowly change the landscape of fuel and convenience, the demand for these defensive assets remains strong. A confidence linked to witnessing some of the most innovative tenants evolve and expand on their offering by utilising their strategically significant locations to create a one-stop shop for customers.
Examples include partnering with major supermarket chains, online retailers such as food delivery platforms and “click & collect” retailers. Electric vehicle rapid charging services will certainly be added to the mix over time but if you consider fuel stations as part of a national retail network, their value comes down to the age-old property mantra of location, location, location!
There are currently 6,500 service stations across Australia and key providers such as Shell, United, 7-Eleven, Viva Energy Australia and BP, along with the major supermarket chains, are expanding their networks. As a result, investor demand continues to go from strength to strength, as evidenced by one of last year’s most attractive opportunities when Burgess Rawson sold Viva Energy/My Car in Torquay, Victoria for $8,355,000 at a yield of 4.89%.
Burgess Rawson recorded exponential growth in 2021, where the sale of essential service assets contributed significantly to a record sales result of 364 commercial properties at a combined value of $1.75 billion.
Due to the increasing popularity of these assets, Burgess Rawson recently appointed two key senior executives to build upon the expertise of the NSW investment sales team in this sector- Head of Agency NSW and Partner, Yosh Mendis, and Director, Geoff Sinclair.
Yosh is one of Sydney’s most prolific sales agents, selling $300 million worth of commercial property alone in 2021, including one of Sydney’s largest fuel and convenience centres.
In his new role, he will be leading a team of market experts including Geoff Sinclair who sold $200 million worth of commercial property in 2021, and the existing Burgess Rawson team featuring Rhys Parker and Kieran Bourke with a proven eight-year track record of consistent sales in the New South Wales market.
Between them, they specialise in the sale of fuel, fast food, childcare, convenience-based retail assets, medical and the industrial investment sector, with a view to expanding into new markets.
Burgess Rawson CEO, Ingrid Filmer said “our growth strategy is underpinned by demonstrating market leading expertise and innovation such as positioning our NSW investment team as the only to offer Portfolio Auctions”.
“Transactions in 2021 have demonstrated ongoing investor confidence in high-quality, essential service assets and not only were investors comfortable bidding at auction via phone or online, but we also saw a high number of cross border sales made sight unseen.”
“We are delighted to welcome Yosh and Geoff to the fold. Their experience and expertise are remarkable.
We have big plans for the Sydney business and have confidence we can deliver exceptional results for our clients with this powerhouse team in place,” she said.
Burgess Rawson’s coveted Portfolio Auctions, are actively watched by the entire property investment community over a three-day auction period and are the litmus test of the market. It is the most up to date example of a cross section of properties in the market and consistently delivers vendors and purchasers certainty and great outcomes.
