New research uncovers a significant shift in the petrol station landscape with the rise of electric vehicles (EVs). According to Vanessa Rader, head of research at Ray White Commercial, service stations experienced a notable boom in 2022, with annual sales surpassing $1 billion for the first time. Factors such as lower interest rates, stable income potential, and future redevelopment opportunities contributed to this surge.
However, the tide has turned since then. Sales have seen a considerable decline, with a sluggish start to 2024. Ray White’s research indicates a sharp 45.6% drop in sales volumes in 2023, followed by only a handful of sales totalling around $40 million in early 2024. On the flip side, EV sales have soared, comprising 8.5% of new car sales.
Investor hesitation stems from uncertainty surrounding the future of service stations, especially with Australia’s commitment to zero emissions by 2050. Unlike other nations, Australia lacks robust objectives regarding the use of petrol cars. This uncertainty, combined with changing finance availability and EV popularity, has dampened service station sales.
However, Ms Rader notes that the continued development of new petrol stations instills confidence in the asset class’s longevity. Buyers are now more selective, prioritising establishments with diversified offerings, including food, entertainment, and EV charging facilities. This selectivity has put upward pressure on yields for secondary locations or assets.
The rise in EV purchases can also be attributed to subsidies, discounts, and state policies. With an estimated 180,000 EVs now on Australian roads, the shift towards EVs is evident. While it may take over 30 years for EVs to dominate the streets, the need for service stations in their current form remains, offering reassurance to existing investors and those eyeing service station investments.
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