Investment into the Service station asset class has grown in appeal over the last five years nationally and increased investment levels over the past three years in Western Australia has resulted in considerable yield compression. With interest rates remaining at a prolonged low and returns on bonds minimal, more investors are seeking an alternative investment type which can demonstrate high yet safe income returns.
Historically, many investors avoided service stations as contamination issues would scare many off, however more recently these large sites have been attractive to developers for residential development opportunities albeit the appeal of a stable income and well maintained assets has led to increased investment demand by a more traditional investor buyer group.
Particularly with the emergence of Coles and Woolworths in this space, these assets offer long term leases with fixed rental increases and paid outgoings. These properties are seen as “set and forget” type investments, highly attractive to these investors seeking a higher return on their equity.