Western Australia is seeing the biggest investments in petrol stations in many years, a new commercial property report from Ray White Research says, with $83 million changing hands over the 2018-19 financial year.
And with WA and Queensland tying for Australia’s highest fuel consumption per person – and WA and the Northern Territory tied for highest diesel consumption – electric vehicles are nowhere near a realistic challenger.
WA’s shrinking workforce and slow population growth had put pressure on both the residential and commercial property market in recent years, the report said.
Coupled with tightening lending practices before the federal election, and the banking royal commission, commercial investors had been cautious.
From 2011-14, petrol station sales never passed $20 million. They spiked to just over $50 million in 2015 then again dropped back to the $25-$35 million range from 2016.
But interest rate reductions, improved sentiment surrounding serviceability of loans and the reduction in unemployment had encouraged an increase in investment activity in recent months.
Ray White Commercial monitored close to $83 million changing hands in the service station market over the past 12 months, far and away the highest number in the past nine years, and close to $60 million of that was in the first half of 2019 alone.
These bumper figures were partly due to the sale of the two new stations flanking Forrest Highway in West Pinjarra to a small private investment group for a reported $34 million.
In addition, a Baldivis site earmarked for a service station sold for $2.2 million in March, while the recently completed Gosnells 7-Eleven sold for $5.1 million in May.
This year was also the first in which regional assets accounted for such a high percentage of sales – almost half, again due to the new Pinjarra stations, as well as the sale of Coles Express in Vasse to an interstate investor.
Most of the buyers tended to be private investors or private funds, the report said, considering the assets a safe, “set and forget” investment with a secure income stream.
Fuel consumption in WA stood at 1491 litres per person in 2017-18, almost on par with QLD’s 1494 litres, topping the nation’s consumption and highlighting these states’ vast size and limited public transport.
A major threat to the survival of the service station industry is the proliferation of electric vehicles, the report said, prompting much speculation on the longevity of petrol station and permanency of petrol-fuelled cars, especially given many overseas nations had mandated reduced sales of petrol cars within the next 20 years.
But the take-up of EVs in Australia had been limited because of high costs and restricted battery life. The Federal Chamber of Automotive Industries had identified only 0.3 per cent of all vehicles registered in 2018 were electric.
Further assuring the long-term need for fuel in WA was its tie with the NT for highest diesel consumption in the country – diesel accounted for almost 54 per cent of fuel sold in both WA and the NT.
And with no feasible electric alternative to diesel trucks, this sector was unlikely to change in the medium term, the report said, making regional truck stops increasingly popular investments.
“Service station operators have put growing emphasis on their retail and food offerings which will encourage longer stays by customers,” it said.
“This changing concept will aid in future-proofing these assets with the addition of greater electric vehicle charging stations in the future.”
Extracted from Brisbane Times