Investment in car dealership property hit one of the highest levels on record in 2022, with £371m of deals struck – up 39% on 2021 and well above the 10-year annual average of £258m, according to the latest Savills Motor Retail Market report.
Savills said the car dealership market was not being affected by uncertainty like other sectors, because underlying occupational activity remained resilient, with dealerships continuing to report strong returns and trading conditions.
However, their profitability is being lessened by rising interest, energy cost and inflation. The report also identified a shift in buyer profile, with the proportion of occupiers acquiring car dealerships rising significantly from 6% in 2018 to 25% in 2022.
Bill Bexson, head of Savills automotive, said: “Car dealerships offer strong investment credentials amidst uncertainty which appeals to investors looking for a safe haven for their money in turbulent times. Its uncorrelated market performance and resilient revenue profile has led to 2022 being one of the best years on record for investment in car dealerships.
“While volatility and downward pricing trajectory has driven some investors to dispose of car dealership assets to raise cash and liquidity, we have witnessed stronger demand from tenants buying assets they occupy, with other tenants buying assets they could either trade from or for income.
“We expect 2023 to be just as active driven by the sector’s ability to combat inflation to sustain real value, and the appeal of both security of income and income growth potential.”
