VALUATION OF PETROL STATIONS

Abstract

Petrol stations are special properties designed for a specific use -- for retailing petrol and diesel and for providing motor services to vehicles. The petrol retailing industry in Singapore is highly competitive, with each brand trying to compete for a greater share of the market. The competitiveness of the industry has driven up the prices for petrol station sites to a skyrocketing level. Valuation of petrol stations can either be for oil companies, motor trade dealers, petrol retailers as well as owners of petrol station land. However, In Singapore, most of the valuation needed are for the oil companies since they are the major owners of petrol stations. Valuations are frequently required for petrol stations sites, for the development of new petrol stations, as well as existing petrol stations for sale and purchase, mortgage or for property tax purpose. The cost method is currently the most widely used valuation method among valuers in Singapore for the valuation of petrol station whereas in many other countries, for example, in the United Kingdom and New Zealand, petrol stations are valued by reference to the Investment method based on throughput (volume of sales). From the findings of the study, it is found that although the investment method based on throughput is a reliable method for petrol station valuations, it is not adopted by valuers in Singapore because of inaccessibility to information such as profitability of the operation of petrol stations and the lack of research for an appropriate capitalisation rate for petrol stations.