Valuing a petrol station in Morocco — property, business and the supply contract

A filling station is the textbook operational asset. Its value is not read off the price per square metre of the plot; it is read off the fuel volumes distributed, the shop, the forecourt services, and above all the supply contract that structures the whole economics of the site. The applicable framework is RICS VPGA 4 — trading property. This note sets out how the property is separated from the business, how the supply agreement is restated, how the environmental liability attaching to underground tanks is handled, and how the land is tested for redevelopment.

A dense network, extremely heterogeneous assets

Morocco has an extensive network of filling stations, split between the major distribution companies and independent operators, across very varied configurations: urban neighbourhood sites, roadside stations on trunk routes, motorway service areas with catering and facilities, and rural relay stations. That heterogeneity makes any rule of thumb dangerous. Two physically comparable stations can be worth very different amounts depending on their traffic, their position on the route — commuting direction, town entrance, rest area — and the distribution contract they operate under.

The occasions for a valuation are numerous: a sale between operators, the renegotiation or expiry of an agreement with an oil company, bank financing secured on the property, a network restructuring, or an arbitrage between continuing to trade and redeveloping the land. In every one of those cases the decision-maker needs a disaggregated, reasoned value — not a single unverifiable number.

Why a filling station falls under VPGA 4

VPGA 4 of the RICS Red Book applies to assets whose value depends on the trade carried on at them. The petrol station is the schoolbook case, cited by the Red Book alongside hotels and cinemas. Reasoning per square metre fails twice over: the land does not explain the value, and the built structures — canopy, forecourt, shop — have almost no value outside the trade.

The reference method is therefore the income approach, built on operating data supplied by the client: fuel volumes by product, distribution margins, shop and ancillary services turnover (car wash, oil change, catering) and operating costs. The valuer does not invent these figures. He analyses and normalises them — stripping out exceptional items and atypical years — and tests them against what a reasonably efficient operator would obtain from the same site, which is the reasonably efficient operator concept at the heart of VPGA 4. It is the same analytical grid we apply to a private clinic or a hotel.

The property/business split: the heart of the instruction

The income approach produces a total value of the asset in trade. The decisive work is then to apportion it:

• The property — the land, the buildings (shop, canopy, plant rooms, forecourt) and the permanent works. This is what a mortgage bites on and what changes hands in a sale of the bricks and mortar.
• The business — passing and local custom, recurring volumes, operating licences and consents, the distribution contract, and the operator's know-how. This is what transfers in a sale of goodwill.
• The distribution equipment — tanks, dispensers, payment and forecourt systems. A specific point of vigilance here: under many contracts these belong to the oil company rather than to the operator or to the owner of the property. Wrongly folding them into the property value is a classic error.

This apportionment determines whether the report is bankable. A lender financing the property wants a property value, supportable by a market rent the trade can genuinely pay — not an arbitrary share of a global figure. The same discipline governs the appraisal of any let property where the passing rent departs from market.

The supply contract: read the agreement before concluding

In Morocco as elsewhere, the relationship between the site and the distribution company takes several contractual forms: a commercial lease granted by a private owner to the oil company; a management lease (location-gérance) granted by the company to an operator; or an exclusive supply contract with an independent owner-operator. Each configuration moves the value:

• Unexpired term and renewal. A long agreement with a first-rank company secures the income attaching to the property; an imminent expiry creates an uncertainty that must be made explicit in the report.
• Level of rent or royalty. A historic or accommodation rent must be restated onto a basis the trade can sustain, exactly as for any over-rented or under-rented asset.
• Ownership of the installations. Who owns the tanks, the dispensers, the brand signage? Who bears their replacement and their upgrading to current standards? The answers are in the contract, not in assumed market practice.
• Exit clauses. Reinstatement obligations, the fate of the equipment at the end of the agreement, non-compete covenants. These bear directly on the residual value of the site.

For an overseas investor this is usually the single most important document in the data room, and it should be translated and read carefully before any price is discussed. It is a point we make in our wider guidance on Moroccan commercial leases under Law 49-16.

Environmental liability: tanks and remediation

This is the heaviest single peculiarity of the asset class. Underground tanks and the handling of hydrocarbons create a potential environmental liability that does not appear anywhere in the trading accounts:

• In trade — the condition of the tanks, their integrity and their compliance with the standards in force condition the continuity of the business; upgrading capital expenditure may be required and is deducted from the cash flows.
• On redevelopment — degassing, tank removal, soil investigation and remediation represent a significant cost, to be deducted from the land value in alternative use. A “gross” redevelopment value that ignores them is simply wrong.
• In liability terms — the allocation of the liability between owner, operator and oil company depends on the contracts and on the regulations in force; the valuer flags it and refers to specialist environmental surveys, which he does not replace.

The report must be explicit on this point: the value conclusions are issued subject to environmental surveys, and the redevelopment scenario is quantified net of reinstatement costs. The logic mirrors the way reinstatement cost is assessed on industrial and logistics buildings — a separate exercise from market value, and one we carry out separately.

The redevelopment test on the land

What is the site worth if distribution stops? The answer runs through highest and best use, the same analysis we apply to any land holding whose value depends on its permitted use. A well-placed roadside station may interest quick-service catering, convenience retail or motor services; a landlocked station may have only a modest residual value. Three successive filters:

• Legal. Zoning, easements and the conditions for a change of use under the applicable planning documents.
• Physical. Plot configuration, access, decommissioning of the installations, remediation.
• Economic. The alternative-use value, net of reinstatement costs, must exceed the value in continued trade before it can be adopted.

The inputs to assemble

• Land and planning — land title (titre foncier), site plans, building and operating consents, zoning.
• Contracts — the supply agreement (lease, management lease, distribution), amendments, expiry schedule, exit clauses.
• Trading — volumes by product over several financial years, margins, shop and services turnover, costs, headcount.
• Technical — age and condition of tanks and dispensers, upgrade history, any environmental surveys available.
• Competitive setting — competing stations on the route, and infrastructure projects capable of diverting traffic.

Common pitfalls

• Valuing on the plot area. Land does not explain the value of a trading station; it is only relevant in a redevelopment scenario, net of remediation.
• Folding the oil company's equipment into the property. Tanks and dispensers frequently belong to the supplier — check the contract.
• Capitalising an off-market rent. A historic or intra-group rent must be restated onto a sustainable basis.
• Ignoring the environmental liability. Any redevelopment value must be net of reinstatement costs.
• Extrapolating an atypical year. Volumes must be normalised over several years, with breaks flagged — roadworks on the route, a competitor opening.

What the report is for

A valuation prepared to RICS standards exists to support a decision and a negotiation: setting a price for the property or the business, documenting a financing file, arbitrating between renewal of the supply agreement and redevelopment, preparing a succession. It is a private valuation — an instrument suitable for amicable negotiation and adversarial discussion, which does not substitute for the expert a judge would appoint in litigation. Our reports are prepared by RICS-certified valuers, compliant with RICS Red Book Global Standards, with an explicit property/business split and clearly stated assumptions and reservations. The same methodology underpins our work on specialised industrial assets.

Fees start from MAD 3,500 excluding tax for standard assets; a filling station is a specialised instruction and is quoted individually. ReaConsult: founded in 2019, RICS-certified valuers, more than 5,000 valuations delivered across 6 Moroccan cities, over 1,000 a year, rated 4.9/5 from 47 Google reviews. Questions of licensing, environmental regulation and contract law should be put to your Moroccan counsel; you can also put the instruction to us directly.