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23 October 2020 | Retail

‘Covid Pounds’ – What impact could ‘Covid Trading’ have on values across the petrol filing station and convenience markets?

Christie & Co was pleased to participate in the PRA Business Bulletin series, a new webinar series delivered via zoom, designed to keep members informed with PRA’s latest activity and in touch with a number of specially selected companies who can offer businesses support.

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Director of Retail, Steve Rodell presented on “COVID Pounds” – What Impact could “COVID Trading” have on Values?

The presentation explored how the valuations approach and associated considerations can help us to understand the impact of the COVID-19 pandemic on values across the petrol filing station and convenience markets. 


How are retail businesses valued?

Valuations of convenience stores and petrol filling stations businesses, normally provided in accordance with the Royal Institution of Chartered Surveyors (RICS) global standards, are based on the measurement of profits, with regard to past, present and potential trading against industry performance indicators.

What is the purpose of the valuation?

  1. To produce a formal opinion of value which can then be used by another company or lender?
In which case it must be undertaken in accordance with RICS global standards (otherwise known as the ‘Red Book’) in order to provide an opinion market value based on assessment of the fair and maintainable trade.
  1. To market the property for sale or to let?
In this case we, are able to provide marketing advice, indicative pricing advice and a guide price based on current activity in the market.
Whilst in theory, the results should be more or less the same, they are more often not – why is this?

The answer lies in the RICS definition of Market Value, which is described in the Red Book as;

“The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.”

Most transactions will normally reflect the assumptions within this definition. However, in a transaction where some of the assumptions do not apply, the actual sale price may differ from the valuation. If a transaction is not ‘arm’s length’, such as an acquisition by an adjoining landowner or a tenant with a special interest, it may be possible to achieve a price above the Market Value.  However, more commonly, if a transaction has not had ‘proper marketing’ and has not been offered to all buyers in the market, this may result in a sale price that is below the Market Value.

Careful identification of potential buyers and any special purchasers, as part of a comprehensive marketing campaign, is therefore the key to achieving sales at, or above, Market Value.   


Market Update: What are the apparent impacts of COVID-19?

The global outbreak of COVID-19 was a unique event which pushed many sectors and markets into a position of uncertainty. The lockdown period, which saw forced closures of businesses, had a direct impact on profits, as many operators experienced significantly reduced turnover. As a result, most transactional activity in retail business sectors was either cancelled or delayed.

On March 17, the RICS recommended a ‘material uncertainty’ clause be applied to valuations across most assets and sectors, to address the sharp and unpredicted shocks to the market caused by the health crisis. With the easing of restrictions, it has since been recommended that this clause be lifted. So where does this leave market values?

In the case of the convenience retail and petrol filling station markets, businesses were allowed to stay open and remained a constant essential service throughout the lockdown period. Communities quickly recognised the convenience and benefits of shopping locally and heavily relied upon their local convenience stores and petrol stations for basic supplies. The operational performance of many convenience retailers has therefore improved, with operators seeing average turnover increases of up to 40% year on year.

Potential buyers have identified the opportunity to capitalise on this market trend, resulting in an increase in demand for businesses that is clearly visible in new buyer registrations on

The extent to which these increases in turnover can be maintained remains to be seen. However, convenience retail has become an incredibly attractive sector to invest in and this sustained demand is also resulting in vendors frequently achieving, or exceeding, the asking price for their retail business.

The market therefore remains robust and we expect market values to gradually increase in response to evidence of sustainable increases in sales and profits following the COVID-19 pandemic.

Steve Rodell comments, “The profitability of convenience stores and petrol stations has improved since the outbreak of the COVID-19 pandemic. Combined with the return of buyers to the market, I expect to see a gradual increase in both the volume of transactions in the market and the prices that can be achieved.”
Please get in touch if we can be of any support to your business at this time.

Steve Rodell
Managing Director – Retail

T  +44 20 7227 0759
M  +44 7738 182 407

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