Carolyn Cummins, 18 September 2015

High net worth investors and developers spent up to $40 million on a portfolio of six Sydney metropolitan petrol stations, which was more than twice the combined written reserve.

Demand was strong as the properties were offered as freehold under a sale process from the trustee-appointed vendor.

In all, the six sites – ranging in locations from Kemps Creek to Villawood – sold for a combined $39.92 million to several buyers.

Agents Harry Bui and Matthew Meynell at Colliers International said there were more than 150 inquiries and 60 contracts for sale issued, while registered bidders reached 56, with an average of 20 bids per property.

“Being freehold, these properties were in hot demand as developers see them as an opportunity to knock down the service station, if they wish, and redevelop into more commercial or possibly residential, depending on the zoning,” Mr Bui said.

“We saw a range of buyers, from owner-occupiers to high net worth syndicates who see bricks and mortar as higher yielding than the volatile sharemarket.”

The highest price was for 51-55 Salisbury Avenue, Kemps Creek, which sold for $14.5 million, followed by the service station at 50-60 Riverside Drive, Airds, for $6.15 million and 896A Woodville Road, Villawood, for $6 million.

The sales follow those of 7-Eleven and supermarket/petrol giant Woolworths, which have, over the years, raised more than $200 million combined from the sale and leaseback of petrol stations. The yields generated on those leasehold sales were about 5.1 per cent.

In May, JLL director in charge, Parramatta, John Macreecompleted the sale and leaseback of 10 Woolworths petrol sites for a combined $15.3 million. The newly built petrol stations in NSW and Queensland were sold with long-term ground leases to Woolworths Petrol.

“The interest in these assets clearly demonstrates the underlying demand for well-positioned investment opportunities with a steady income stream,” Mr Bui said.

“We have sold several service stations this year and we’ve experienced strong demand from a range of investors who see such assets as strong, long-term investment opportunities as a result of good capital growth and steady returns.”

Mr Bui said the Colliers International spring auction attracted record crowds as buyers and spectators overflowed from the auction rooms.

Matthew Meynell, head of investment sales, Australia, at Colliers International, said the attendance at the quarterly auction in Sydney was a clear indication of the continuing strength of the commercial property market.

“The fluctuating equities markets and weakening Australian dollar are continuing to drive Australian investors to the property market, both residential and commercial,” Mr Meynell said.

Extracted in full from the Sydney Morning Herald.