Strong fundamentals fuel demand for service stations.
Australia’s retail fuel sector is getting more than its share of attention in 2021 thanks to its ability to operate uninterrupted throughout the pandemic as an essential service.
This stability, coupled with the long-term nature of tenancies and the sector’s growing market share in convenience retail, is helping to drive the strongest demand for retail fuel assets in years.
The investment fundamentals are compelling.
Retail fuel assets are securing lease terms of up to 10 to 20 years, with quality national tenants such as 7-Eleven, Viva Energy and United Petroleum bolstering their convenience retail service. This has been a win during the pandemic and places them well ahead of the major supermarket chains in the ‘local store’ offer.
It’s also a secure asset class as sales of new petrol-powered vehicles in Australia continue to grow. From 2019-2020, the national fleet increased by 1.5% and as Australia makes plans to return to some form of normality, demand for fuel will only increase.
Metropolitan locations are consistently in high demand, but we are also seeing strong interest in regional locations as major chains continue to expand. Many regional cities have continued to operate with minimal disruption over the course of the pandemic which has attracted greater investor interest.
Recent sales highlights include a Shell/Viva investment in Queenstown, South Australia that sold for $3,675,000, a United asset in Braeside, Victoria that sold for $4 million, a 7-Eleven investment that sold for $5,750,000 in Lansvale in NSW and a Shell/Viva Energy investment in Parafield Gardens, South Australia which sold for $3 million.
Next month, in the largest commercial portfolio auction, to ever hit the Australian market, Burgess Rawson will send a further eleven fuel investment assets under the hammer.
Three United Fuel properties in Melbourne and Adelaide are up for auction, as well as three Shell/Viva Energy assets in Queensland. The portfolio also includes a Caltex/Ampol in Newman, WA; EG Fuel Group in Salamander Bay, NSW and 7-Eleven in Marks Point, NSW.
They are part of a record portfolio of 61 commercial properties, with a combined value of $260 million, to be auctioned in a three-day event. More than 30,000 investors are expected to tune in for the action across the three-day super event.
Essential service assets remain investor favourites, demonstrating an ability to trade strongly throughout the pandemic. Fuel was one of the standout performers in our most recent auction in early August and I would expect the same again, with most (if not all) likely to be purchased sight unseen.
For more details on the auction click here.
– Jamie Perlinger, Head of Agency VIC