Liquor, hotels and pubs is becoming an enticing commercial investment sector. Photo – Canva
  • Hotels, pubs and liquor stores are becoming popular commercial investments
  • The liquor retailing sector in Australia is growing by 4.6% annually, to $15.5 billion
  • Licenses are hard to get and are not easily transportable

The liquor retailing sector in Australia is growing by 4.6% annually, with a total value of $15.5 billion in 2021, according to IBIS Worldwide.

With the disruptions of the past year moving investors into naturally defensive assets such as retail, fuel and childcare centres, the “new darling” of the commercial sector are hotels, liquor stores and pubs.

This may seem surprising in an era of lockdowns and interruptions to the hospitality industry, but with more people stuck at home, they will not stop buying alcohol. And when hotels and pubs have re-opened, they have been inundated.

“Liquor and pubs are some of the most sought-after classes of commercial property.”

“Investing in commercial property is not just investing in the physical property but the tenant as well and in the case of liquor and pubs. Australian brands are rock solid.”

Michael Gilbert, Burgess Rawson’s Director of Sales in Sydney

Melbourne Director Jamie Perlinger agreed that the sector had performed well during COVID despite the various intermittent closures, with the sector bouncing back remarkably.

“In February, Woolworths announced a 335% rebound in the ALH Group half year profit and a 24% increase in Dan Murphy’s and BWS profits (H1 FY21 compared to H1 FY20) demonstrating that the diversification succeeded and now – together – they can prosper through a pandemic,” he said.

In the same month, Australia’s largest hotelier and liquor retailer Endeavour Group reported a 10% increase in half-year revenue despite all the disruptions.

Endeavour Group was the result of the merger of Woolworths’ Liquor business, anchored by Dan Murphy’s and BWS, and their pub business, ALH Group. Sales are $10 billion with EBITDA of $1 billion. The group is 85% owned by Woolworths.

“Go back 20 years or so, Woolworths and Coles’ entry to the pub market was the ‘multiplier’ for their respective liquor businesses,” said Mr Gilbert.

“Retailers are unable to operate a bottle shop in Queensland without a pub license,” said Mr Gilbert. “Consequently, most Queensland Dan Murphy’s and First Choice stores are located on hotel sites.”

“In the specific case of hotels, these high-profile locations are tightly held. Licenses are incredibly hard to get and are not easily transportable which underpins both the land value and the ongoing security of the investment.

“In terms of long-term returns, l really think this is a sector to watch in 2021.”

Jamie Perlinger, Melbourne Director, Burgess Rawson

You May Also Like

“Sydney setting the pace”: CBD office rents march higher

Cushman & Wakefield’s quarterly Office Marketbeat reveals 2.9% quarter-on-quarter uplift in Sydney

Canberra office market shows impressive resilience and growth

The market is underpinned by low vacancy, large developments in the pipeline and strong rental growth

Accenture and Lendlease to expand data insights platform

The platform which uses AI and virtual reality will be expanded to increase digital and in-store visits.

Demand for life science assets on the rise in Australia

Australians are getting older and this is contributing to the increase in demand for life science assets across Australia

Experts Corner by The Property Tribune

Ko & NPA partner to launch several co-owned luxury properties at Mermaid Beach, Gold Coast

Ko's partnership with NPA Projects provides more opportunities to co-own off-the-plan holiday residences, including exclusive Gold Coast properties

Continue reading

Top Articles

Expert tips on how to be a successful property investor

Property expert and buyer's agent, Lloyd Edge, shares his insights.

Australian commercial property update: Industrial and tourism assets lead the pack in trying times

Commercial assets have faced volatility recently, driven by financing changes and demand fluctuations from institutions and funds.

WA has emerged as a property investment hub, and why that's a good thing

Eastern investors chase Perth's affordability, doubling the distance between home and investment in 2023, reveals MCG research.