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Sunday / 14 July 2024
HomeFeaturesHow much it costs to buy a petrol station in South Africa

How much it costs to buy a petrol station in South Africa

Suppose you’re looking to get into the competitive fuel-retailer industry by buying a well-established service station such as Astron, BP, Caltex, Engen, Sasol, Shell, Total, or Puma, then you’ll need a pretty penny.

Local commercial property agent Cyrus Brokers has 15 petrol stations listed for sale across the country with a wide range of asking prices.

At the bottom end of the spectrum, a service stop located in Randburg, Gauteng, is currently on the market for R3 million which can be considered chump change in the grand scheme of things.

Another one in the northern Free State is selling for R4.9 million, and one in Mpumalanga is going for a sizeable R9 million.

In Pretoria CBD, Gauteng, one of the busiest areas in the nation, a petrol franchise is available at R15 million, and if you have a little bit more to spend, you can go for one in Limpopo listed at R16.1 million.

The absolute priciest filling stations on the listings page are one on the outskirts of Pretoria with a barrier-to-entry of R38 million, and another in Midlands, KwaZulu-Natal (KZN) for R38.5 million.

The value of a petrol station in South Africa

It appears that the value of a service station is largely dependent on its location as this determines the number of competitors around it, and consequently its income.

Additionally, whether the buyer will take full or partial ownership of the station, how much stock it has on hand, the existing supplier contracts, and whether the property on which it is located is included in the deal, affects the final selling price.

For instance, the most affordable listing on Cyrus Brokers is in Randburg, Gauteng – a densely populated area with plenty of alternatives around should the location be too busy or just too far out of the way for commuters.

The buyer of this station is only required to purchase a minimum 51% stake as stipulated by the oil company supplying it, and the deal excludes property rights.

The income of the Randburg station is broken down in the following table:

Revenue source Monthly sales
Fuel 97,066 litres
Convenience store R543,061
Electricity R38,470
Airtime R18,629
Oil/lube R7,065
Gas R5,048

Across these revenue streams, the Gauteng-based facility achieves a net profit of approximately R84,697 per month.

Taking into account its location, the deal structure, and its income, the facility fetches an asking price of R3 million excluding and R4 million including stock.

In contrast, the most expensive listing on Cyrus Brokers is for a station situated in a “busy town” in Midlands, KZN, where there are few other places to go when you need fuel.

The purchase agreement includes the property, franchised shop and restaurant/takeaway businesses, and a supply agreement with an oil company for 10 years with an option to extend it for another 12 years.

The income of the Midlands station is broken down in the following table:

Revenue source Monthly sales
Fuel 300,000 litres
Franchised convenience store  R1.1 million
Franchised restaurant/takeaways R480,000

Across these revenue streams, the KZN-based service stop pulls in a net profit of approximately R390,000 per month.

Excluding the stock, a buyer would need the sum of R38.5 million to purchase this particular station, said the listing.

Including stock, this jumps to R40 million, of which they will need to have at least R20 million in cash readily available.

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