Ray White Head of Research, Vanessa Rader, said service station transactions have fallen to just $40 million in 2024. However, she contends the asset class will remain relevant as operators add new income streams.

“While EVs have grown in popularity, particularly given the rapid rise in fuel costs, the continued development of new petrol stations has given confidence to the longevity of the asset class,” Ms Rader said.

“Over the last few years, we saw turnover levels show some volatility dependent upon volume of larger portfolio sales, however, activity peaked in 2022 where volumes eclipsed $1 billion for the first time.

“This high rate attributed to not only the growth in sales numbers but also the rapid escalation in values as yield ranges fell to as low as 3.9 per cent with a 5.9 per cent annual average.”

According to Ms Rader, service station transactions fell 45.6 per cent in 2023, and have only recorded a modest number of sales in 2024. “This reduction in sales activity has been heavily influenced by changing availability and cost of finance more so than a turnaround in sentiment towards the actual asset class dominated by private investors, syndicates and developers,” she said.

She claimed the “secret sauce” for buyers is seeking out high performing establishments with a long-term view on food, entertainment and charging offerings. “Buyers have been more considered regarding local competition, future supply, land banking or development opportunities in the medium to longer term putting upward pressure on yields for more secondary locations or assets, a trend expected to continue this year,” she said.

“However, the expectation of interest rate reductions this year is anticipated to spur on activity for prime service station assets keeping yields competitive and new supply projects continuing.

“These new projects with a strong commitment to catering for EV customers, fast and ultrafast charging facilities, improved in store experiences or multiple onsite offerings including entertainment revolutionising what a service station will be into the future.”

Charging locations have increased 75 per cent in 2023 – a number that is likely to keep on growing. “While Australia is home to approximately 21 million privately owned vehicles, the need for fuel will not dissipate and service stations will remain a major need in our communities,” she said.

“State policy surrounding the use of EV vehicles, subsidies and discounts have done much to stimulate investment into these vehicles with 8.5 per cent of new sales in 2023 representing battery electric vehicles and plug-in hybrid electric vehicles, a huge uptick on previous years.

“While it's anticipated that it will take more than 30 years for EVs to be the dominant vehicle on our roads, the requirement for service stations in their current form will not go away; giving confidence to existing investors and those seeking out service station investment.”