Petroleum investments set to grow

Posted On Wednesday, 17 November 2010 02:00 Published by eProp Commercial Property News
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Experts anticipate that the demand for petroleum sites will continue to grow over coming months and the activity seen by eager investors in this sector is proof of this.

Property-Housing-ResidentialWhen looking for an opportunity to invest, key fundamentals of the return need to be taken into account. After interviewing industry players in the oil and gas sector, general sentiment confirms that deregulation in the next five years can be expected.

Listening to a recent lecture by Dr Azar Jammine of Econometrix Pty Ltd, South Africa can expect a 3.5% GDP growth (versus advanced economies at an average of 2.2% for 2011). Dr Jammine placed emphasis on the rise in services as a key sector in the economy at 6.3% from 2001-2009 (versus 4.7% between 1993 & 2001).

Household debt levels still remain high at 78% of disposable income, which affects more the traditional retail sector, but petrol is considered a necessity and an enabler to most people’s daily living and occupation.

In addition, positive sentiment for South Africans is further strengthened with the Rand having increased 12.8% against the dollar, government debt is relatively low and interest rates are at their lowest levels in more than two decades. The result is opportunity and financial gain for savvy entrepreneurs with access to money.

Petrol stations, be they active or closed sites, have held strong over the last three years and the demand is not abating. Auction Alliance entered this sector right at the start in 2008 and has played an active role in nurturing the demand, particularly in the auction sector. A recent pre-auction sale in Noordhoek for R16 million by Auction Alliance proved this loyal following.

November brings with it a buffet of offerings on the auction floor for petroleum sales, brandishing multinational brands like Total, Chevron and Engen. For those interested in closed sites, where they can utilise the land for alternative uses, Chevron have instructed the sale of 263 Voortrekker Rd, Parow and another site in Kwa-Zulu Natal, called Amajuba Service Station on 33 Renoster road, Newcastle.

Total, who rarely offload, have taken a strategic view over their Epping site on 1 Bertie Avenue and two private individuals have decided to include their own Total sites and benefit from the overflow of interest.

These include AZ Berman, Mitchells Plain (Total), and the gem in the crown, 345 Main Rd, Sea Point, which boasts not only 2,000 m2 of General Business B3 plus residential zoning and a generous seven storey height restriction for redevelopment, but is simply the only service station on that stretch of Main Rd in Sea Point.

Besides its strategic location, the site pumps 212 595 litres per month, where a portion is rebated to the owner, plus additional revenue of just over R100,000 from the dwelling, shop, warehouse and show room.

Total has indicated that they will definitely exercise their renewal option periods as it is their most visible site in relation to the Waterfront and the Cape Town CBD.

They have indicated that should redevelopment take place, Total would contribute towards such costs in the form of a rebate, and at the very least pay for new pumps and tanks (if required).

A final offering at the multiple auction, taking place on 30 November, is Engen’s Town Centre site situated in Mitchells Plain. The auction takes place at 12pm at the Crystal Towers Hotel & Spa, Century City.

Last modified on Thursday, 12 June 2014 11:57

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