Investors looking to diversify portfolios are increasingly turning to money-making niche assets with car dealerships top of the list, according to alternative property adviser Rapleys.
The consultancy’s Alternative Assets report assessed performance, outlook, challenges and opportunities with themes and trends across 16 niche sectors including automotive, drive thru, roadside and self storage. Of the sectors, automotive and roadside performed best.
It said that over the last three years, alternatives have often outperformed traditional/core industries with investors spotting huge potential to diversify their portfolios and realise value.
New manufacturers from Asia and in particular China, have driven demand for car dealerships, mainly through dealer relationships, and in spite of a drop off in the used car market with some divesting from used car initiatives entirely including Pendragon (Car Store).
Daniel Cook, partner and head of automotive and roadside at Rapleys, said: “In 2024, alternative assets represent a large part of real estate transactions and our report highlights the opportunities and challenges for assets that investors are increasingly interested in, despite most not having much experience, and where developers can add real value, occupiers need expert real estate advice and Local Authorities can build up more knowledge.
“Niche assets come with niche risks and challenges. Investors also need to be aware of how to tackle these in order to gain competitive advantage.
“Car dealerships and petrol stations in particular face challenges including the evolution of EVs which pose conversion cost conundrums and weight issues, net zero target compliance despite bespoke cooling and lighting requirements and rising build material costs that may threaten viability of development. That’s why expert guidance to determine how to make the most of genuine opportunities and sidestep potential obstacles in these niche areas is crucial.”
He said one of the biggest obstacles to growth in automotive and roadside is supply. “With investors lined up to acquire the best sites and assets, the report highlights that ready-made property in this sector is hard to come by, with Rapleys reporting up to 100 ‘buy’ calls for every one ‘sales’ call for petrol stations alone.”
