Is the pharmacy real estate market continuing to perform well after 18 months of the pandemic? Leading broker Natalie Sirianni provides her view
The pharmacy market in Australia is complex and interesting, and constantly changing and evolving. And this is what makes the industry an exciting one to be part of!
Despite the lockdowns and unusual year that 2021 has been so far, the pharmacy business sales market is performing very well.
While it varies for each pharmacy based on location, size and a number of other characteristics, overall, pharmacies are selling very well at the moment and buyer demand is strong.
The key factors
This strong demand is mostly due to the same three main factors we talked about in our February Market update, which are:
- COVID – while each pharmacy business has experienced different results during COVID, (mostly due to the location of the business and the direct impact of COVID lockdowns on the local community), the impact on the pharmacy business sales market is that buyers can very clearly see the strengths and relatively low risk of a pharmacy business compared to other small to medium sized businesses. This has led to strong demand from pharmacy buyers throughout Australia. COVID has however effectively led to a two-tiered market for the pharmacy market, depending on the impact of COVID on the business; a strong market in the majority of locations and a slow or cautious market where the COVID has impacted patients.
- 7CPA – the signing of the 7th Community Pharmacy Agreement in mid-2020 provided certainty to the pharmacy market and also brought about increased demand from buyers of pharmacies.
- Record Low Interest Rates – current interest rates are at record lows and given most pharmacy buyers borrow money for their purchase, this means that pharmacy owners are now getting better returns. This again has resulted in strong demand for pharmacies throughout Australia.
Therefore, the demand to buy pharmacies over the last year or so has been very strong. Supply is also relatively low compared to historical levels. While the supply has increased so far during the 2021 calendar year and there have been more businesses come to market, the demand for pharmacies still far outweighs the supply of pharmacies to buy. This is keeping the market strong and pharmacy prices being achieved are very solid.
What we are also seeing in the current market is that the ‘in-demand’ pharmacies are selling in a very timely manner, with buyers putting in offers quickly to ensure they don’t miss out.
But, please note, while offers for ‘in-demand’ businesses are coming in very quickly at the moment, the overall sales process is taking a lot longer than it has in the past. This is mainly due to the finance and transfer of lease processes taking longer than they did historically.
So, if you are looking to sell, make sure you get onto the process sooner rather than later, as the overall process is taking longer due to longer processing times for the business sales steps (i.e. legal, due diligence, and transfers of ownership).
If you have any questions about the pharmacy market in your area, or how it would impact on the price achieved for your pharmacy, please call me on 1300 ATTAIN (1300 288 246) to discuss. I look forward to hearing from you!
Natalie Sirianni is director, Attain Business Brokers
Click here to listen to Frank Sirianni discuss the pharmacy market at APP2021 this year