Full steam ahead: why WA petrol stations are an attractive investment

Savvy investors have set their sights on petrol stations in Western Australia as a ‘set and forget’ purchase strategy with long leases, steady annual rents and low interest rates creating an attractive asset class.

Colliers International WA state chief executive Richard Cash said with an average ticket price of between $5 to $7 million, petrol stations were considered an affordable and “passive” investment.

“Fundamentally, the savvy investors are looking for land that’s very well located, so ideally a strong corner, traffic light controlled type of intersection, dual laneways on a major road or highway… so at a point in time that site might be repurposed into something else,” Mr Cash said.

“I think the nature of what a petrol station is has changed and what I mean is if you go into a modern petrol station now the convenience store offering is pretty extensive.

“It is one of those things if you get caught short you can go and get bread or milk at 4 o’clock in the morning at your local petrol station. They trade very long hours.”

United Maddington recently put to market by JLL with industry sources expecting a price expectation of circa $6.5million plus. Picture: realcommercial.com.au/sold

Bucking the trend 

JLL capital markets WA director Sean Flynn said with the uncertainty associated with investment markets across some categories, petrol stations have been considered pretty robust.

“There has been a spur on the outcome of petrol stations around the metro [area], there has been a lot of new development and a lot of participants,” he said.

Mr Flynn said years ago the industry was a lot smaller but nowadays there were many independent participants, and as a result there were now more buying opportunities.

“So you’ve got the blue chip buying opportunities, you have Shell, BP – sort of household names –  and then you’ve got your United coming to the market,” he said.

“And they have added another category to the market and typically over the journey we have seen the Shell and BP brand sides selling at tighter yields, so at cost premiums, but it does give other participants the opportunity to get into a product.”

Curtin University School of Economics and Finance instructor Elson Goh ok said during the last few years petrol stations were among commercial properties, like medical practises, that were becoming more popular.

“I think it’s because of the fact that if you were to look at the commercial properties of the last few years it has had that similar run as with residential properties. That is because a lot of businesses are still in limbo …some may either downsize, downskill or move interstate,” he said.

“But certainly the ones that are here to stay, and may have a bit more traction are medical practises and petrol stations because it is not as uncertain as other ones, for example your restaurants or cafes.”

Mr Cash said growth areas included WA’s south west where 7-11 had recently opened in Busselton and they were looking to continue to extend their network further from the Perth CBD.

The current low interest rate environment was helping fuel investment in petrol stations, Mr Cash said.

“If you could get five and three quarters, or 6% on your money from a national tenant –  who you know is going to be very reliable in the payment of that rent –  then many people would rather invest it in the property,” he said. 

“And [it’s] something they can drive past and look at a lot of the time [rather] than if you have the money sitting in the bank, where really the value of that is going backwards.” 

Best Buys on the WA petrol market

Here’s a look at some of the best buys when it comes to petrol stations in Western Australia.

High exposure site in Stratton

This fully leased 24/7 Ampol petrol station comes with a Foodary and Wok in a Box business. Located on a high exposure site on Toodyay Road, the 2725 sqm site comes with a 15 year lease and a net income pa of $347,356.

This petrol station comes with a 15-year lease. Picture: realcommercial.com.au/for-sale

It is being sold via private treaty by Colliers International. 

Coastal opportunity in Jurien Bay

Located in the coastal town of Jurien Bay, about 200km north of the Perth CBD, this modern petrol station comes with a national tenant and the site spans 2085 square metres.

This petrol station is ideally located in the coastal town of Jurien Bay. Picture: realcommercial.com.au/for-sale

It has a price tag of $4.995 million.

Near new investment in Ravenswood

Situated on a major west-east road that links the Peel and Mandurah regions, this “as new” fuel and convenience investment has a long-term 15 year lease to 2033 with options to 2053.

This petrol station is being sold by an Expressions of Interest campaign. Picture: realcommercial.com.au/for-sale

It is being sold as an Expressions of Interest campaign, with a price guide of $9,750,000.