$5.3m hopes for Geelong West childcare centre
Investing in property used to be as safe as houses, but investors have discovered a new asset class that is triple-A rated.
New childcare centres are popping across the landscape, usually on large landholdings with main road locations, but the real kick is the Federal Government is underwriting the system through its childcare rebate arrangements.
A new Geelong West centre is the latest to hit the market, when it is offered at auction at Melbourne’s Crown Casino on June 20.
Commercial Insights: Subscribe to receive the latest news and updates
The property is expected to sell for around $5.3 million, equating to an attractive net return for the incoming investor of 6.5% net.
Melbourne agents Burgess Rawson has listed the property at 149-153 Church St, Geelong West, where Elements Childcare is at the start of a 15-year lease on the property on a large, high-profile site at the intersection of Shannon Ave.
Associate director Adam Thomas says investors are attracted to the security of the asset class.
“Yields have stabilised and stock volumes continue in an upward trajectory, reinforcing the fact that childcare centres are a highly sought-after investment experiencing exponential growth,” Thomas says.
Elements Childcare has a 15-year lease for newly extended centre at 149-153 Church St, Geelong West.
“Ongoing low interest rates have caused a shift from the security of cash and bonds to higher yielding direct property investments. Risk-adverse buyers are therefore competing strongly for limited opportunities to acquire AAA-grade commercial assets.”
Agent Natalie Couper says the property has attracted widespread interest, with Geelong and Melbourne-based investment groups and interstate buyers looking to capitalise on the growth asset.
“The major attraction is the long secure lease, which is in favour of Elements Childcare, who are well established and have two additional centres at Belmont and Torquay,” Couper says.
Astute investors are also recognising the strength of this location in one of Geelong’s most sought after suburbs, she says.
“Sites of this size and scale are difficult to replicate, due to the modest average block size and tightly held ownership in the immediate vicinity,” Couper says.
The consolidated site totals 2481sqm, with a combined street frontage of over 100 metres.
The centre opened in 2016 and was extended in 2017, accommodates 137 children and is reported to be operating at near 100% occupancy. The net income is $345,530 a year, plus GST.
This article from the Geelong Advertiser originally appeared as “Geelong West childcare centre site has $5.3m price hopes at auction”.
