Car dealerships and holiday parks now share the podium of pandemic-proof properties alongside assets such as fast food and medical facilities. Regional caravan and holiday parks are in huge demand from investors across the board looking to capitalise on the surge in domestic tourism. At the same time the automotive industry has experienced an almost 30% rise in car sales from January to June – the highest since 2018 according to the Federal Chamber of Automotive Industries. Prices for new cars rose 7.4% in 12 months, while buyers are paying an average of 40 % more for used cars than they were in February last year.
A dramatic drop in the use of public transport in favour of vehicles combined with rising domestic travel are strong drivers of heightened demand for car dealerships. Ex-pats returning home is another. By March this year close to 480,000 Australians – about half the total number of Australians living abroad - had returned since the beginning of the pandemic according to expat network advance.org.
Profits In Top Gear
The doubling and in some cases tripling of dealership profits in the past 18 months has enhanced the appeal of automotive investments said David Buckley, partner with industry advisory firm Fordham Group. Profit results from two of Australia’s leading ASX-listed dealerships have increased four-fold and up to 17-fold: sales at Peter Warren Automotive jumped 400% in the past year while Eagers Automotive net profit soared to $202 million from just $11.8 million in the same time. “It’s a classic supply versus demand scenario,” Mr Buckley said.
“The auto sector has always enjoyed strong interest but automotive assets have quickly become investor favourites thanks to their ability to trade and perform strongly through the pandemic.”
The situation has led to rarely offered assets and once-in-a-lifetime-style opportunities coming to market as owners choose to divest in the favourable climate. In Victoria, Burgess Rawson is marketing a blue-chip 6953sqm Chadstone Ford, Hyundai and Hungry Jack’s corner freehold site. The site, offering both automotive and fast food assets with a 141 metre Princes Highway frontage, is the largest commercial 1 zoned site in the precinct.
The sector’s ability to thrive and remain so remarkably buoyant during the pandemic has made it a standout performer said Burgess Rawson National Director Jamie Perlinger. “Record profitability and consolidations across this sector have led to a huge increase in the buyer pool for car dealership freehold investments,” he said. “These assets tick all the boxes.”
Big Plus In Park Life
Holiday accommodation has hit top gear along with the automotive industry. Caravan and holiday parks especially along the NSW east coast are drawing record demand and prices as domestic tourism experiences enormous growth. As with cars, sales of caravans and motorhomes are on the up, currently running at a 30-year high and rising. Figures from caravan loan provider Positive Lending show about 750,000 caravans, and motorhomes registered in Australia in May this year.
Agents with Australia’s longest established specialist in accommodation and hospitality sales, ResortBrokers report the most buoyant industry conditions in the company’s 32-year history. Purchasers encompass the full range of investors from the biggest players such as NRMA and Ingenia to mum and dad buyers after small regional businesses. Prices for quality parks have increased by up to 50 per cent in the past 18 months at an average of more than 30 per cent. “We’re experiencing an incredible time,” said Russell Rogers, a senior executive with ResortBrokers. “The big players like NRMA and Discovery Park are in a massive expansion mode.
“Anything on the east coast of Australia is extremely hot at the moment and often sold off market.” Mr Rogers said he for example he recently sold a modest retreat offering a collection of holiday rental villas on the banks of the Shoalhaven River for close to $4 million. “A few years ago it would have been worth half that price,” he said.
In the last month alone ResortBrokers sold four regional caravan parks for a total of around $22 million. The transactions were notable for both the speed at which they transacted and the fierce competition from major investors and family businesses alike. In addition to the sales of The Colonial Tweed Holiday and Home Park at Tweed Heads in NSW, the Hidden Valley Holiday Park in Darwin, Wild River Caravan Park at Herberton in far north Queensland and the Chinchilla Tourist Park in the Western Downs region of Queensland, ResortBrokers has another five parks worth a total of just over $34 million currently under contract.
David and Goliath Buying Battles
Family operator and buyer of The Colonial Tweed Holiday and Home Park Phillip Clark said he was forced to fight hard against “big market players” for the asset, his second after purchasing the 140 site Bay Village Estate at Morriset in NSW 10 years ago.
“The big corporates have now moved into the market and this made it hard for me to secure a high quality park asset with scale,” Mr Clark said. “There’s definitely a lot more competition for these park assets and this has pushed prices higher. We were pushed high to buy the Colonial Tweed but I still believe it’s a good purchase because of its high quality, excellent location and it has outstanding managers already in place.”
ResortBrokers’ South Australia and Northern Territory specialist Kelli Crouch said Australians were embracing “the good old-fashioned” road trip in the wake of international border closures.
“That means accommodation assets that are located in areas that are relatively COVID-free are benefiting from this as well,” she said.
“The cap rates on these regional caravan parks has remained largely unchanged for the past 20 or so years, until this year when they have tightened because of this surge in demand,” she said.
“As soon as we list a caravan park, and especially if it’s good quality, we’re getting serious offers. In the past, parks would often take some time to get sold but now that’s changed dramatically.”