Investment Yields Tighten for Service Station Assets

Investment Yields Tighten for Service Station Assets

Increased demand from property investors for service station assets in metropolitan and regional areas of Queensland has resulted in a strong consolidation of yields, Ray White Commercial research has found.

“Service stations have been highly sought after by a new breed of property investors looking to secure assets with long lease tails to multinational tenants in both major city centres and regional areas of Queensland,” Ray White Commercial Head of Research, Vanessa Rader said in the Between the Lines Queensland Service Stations October 2016 report.

“In many cases these assets have limited outgoing expenses and a stable income outlook making them increasingly popular amongst a growing number of purchasers.

“This has resulted in increased competition and reducing average yields across both SEQ and regional Queensland which is set to continue for the remainder of 2016 and into next year.”

Vanessa Rader said service station assets have grown in appeal over the last five years with the highest level of transactions recorded in 2014 when a number of portfolio sales were completed.

“More recently in 2015 and 2016 (to August) sales volumes have reduced due to a lack of quality stock available to the market rather than demand to purchase,” she said.

“2016 to date has been reasonably strong recording $131.943 million, close to the 2015  result of $175.357 million.”

Ray White Commercial Queensland Director of Sales, John Dwyer, said there had been a large increase in demand from investors who previously were strong residential or share market investors in the sub $5 million price range.

“This trend is likely to continue as alternative investment options which offer stable returns are limited while the yield compression in markets such as small retail strips, strata office and industrial is likely to be mirrored in the service station market,” he said.