They might lack the prestige of an office skyscraper or the glamour of a luxury block of flats, but that has not stopped petrol stations hitting the headlines lately.

Last week, the billionaire Issa brothers and TDR Capital announced their plan to sell Asda’s petrol station business for £750m to EG Group, which they also own, after they complete their deal to buy the supermarket giant.

While there is a specific strategic play involved in this instance, the acquisition is the latest in a slew of big-ticket deals for roadside assets.

In December, Irish petrol station and roadside convenience operator Applegreen was taken private by its founders in a €718m (£631m) deal backed by Blackstone.

So has roadside, like industrial before it, suddenly changed from an ugly duckling into a swan?

EG Group announced it would obtain Asda’s car washes, ancillary land and petrol-filling stations as part of the deal, further expanding its vast empire of forecourt property.

Rapleys senior associate Mark Frostick says the deal is “a good fit” for EG Group, as it gives EG “a lot of buying power and sites”.

Figures given to Property Week from the Local Data Company show that there are currently 309 Asda petrol stations. Frostick says that EG Group’s deal is the “only way the firm can carry on growing their network as portfolios of that size are rarely up for grabs”.

Andrew Jones, the boss of LondonMetric, has won plaudits for pivoting from retail to industrial before many noticed the winds of change with the rise of ecommerce. His latest bull move is a spending spree for roadside assets, swooping on almost £100m of acquisitions in the past two years.

“You don’t want to shout about it too loudly or it will get busy. That’s what happened to the bloody shed market,” he half-jokes.

The core attraction of roadside properties is the convenience retail, he believes. “When we’re buying a petrol station, we’re really buying a 4,500 sq ft grocery store,” he says, adding that unlike some grocery outlets, roadside stores offer parking and attract customers picking up fuel and doing top-up shops.

Attracting big backers

The once unsexy sector is certainly now attracting some big-name backers.“If Blackstone thinks this sector is good, that’s a pretty good sign,” says Simon Galway, head of petroleum and automotive at CBRE, adding that appetite for roadside assets has remained resilient during lockdown as convenience stores at petrol stations have become part of the “critical infrastructure”.

EG Group is one of several key players that currently dominate the market, alongside Motor Fuel Group – the UK’s largest independent forecourt operator – and Rontec, chaired by real estate veteran Gerald Ronson.

Galway says convenience retail has increasingly driven the demand from the likes of Ronson: “Retail is detail for Ronson. His view for now and the future is that if you get the retail side of it right, you can have a very profitable business.”

However, Tom Rigg, Cushman & Wakefield’s head of UK automotive and roadside, says that despite the growing popularity of such assets, in future we will see a greater divergence between primary and secondary assets.

“Funds will still look at well-let strong covenants in good trading locations, but anything offered to the market that does not match those criteria will probably fall short of their investment committees.”

Other challenges on the horizon include the government’s plan to ban the sale of new cars and vans powered wholly by petrol and diesel from 2030. “If everyone can charge up at home, then you won’t need to go to a petrol station,” Frostick says.

While questions over a petrol and diesel car ban are looming, EG Group’s £750m deal shows that, for now, the drive into roadside real estate is not slowing down.