Childcare market hurtles forward

Investors are looking to capitalise on the increasing demand for places at childcare centres, with interest in developing properties and land into new centres on the rise.

The childcare industry is “Australia’s burgeoning real estate investment class”, Colliers International says in a recent report, and new deals continue to support that claim.

“The child care industry saw record yields and transaction volumes take place in 2015, and the first half of 2016 has seen this pace continue,” the report says.

“Child care centres are emerging as a true property investment class, which is underpinned by social trends.”

Tightening grip: Major players set to dominate childcare market

Colliers says over the first six months of the year yields within the investment class ranged from 3.9% to 7.3%.

“Over the next few years, as operators consolidate and institutions look for scale in the industry, the market will see more transactions occur resulting in yields remaining sharp in the short to medium term,” Colliers predicts.

Commercial agents Burgess Rawson echo that sentiment of growing interest.

“Owning a childcare centre comes with the potential for long-term leases and healthy rental yields, which are generally circa 6%,” they report.

LEAD will develop a more than 200-place childcare centre at Mango Hill in Queensland.

“The potential for positive capital growth is also good, although it will of course depend on a number of factors, such as the age and condition of the centre and its location.”

Expanding childcare service provider LEAD Childcare is one of a number of groups seeking to take advantage of the growing interest in the sector by developing a site in Mango Hill, which neighbours North Lakes in Brisbane’s northern suburbs.

LEAD acquired the 1.52ha site at 2 Halpine Drive, Mango Hill, in Brisbane’s northern growth corridor, for $4.85 million to build a 200-plus place childcare facility.

Child care centres are emerging as a true property investment class, which is underpinned by social trends

The acquisition came after an expression of interest campaign managed by Ray White special project Queensland’s Matthew Fritzsche, on behalf of the property’s private owners.

“They (the buyers) were attracted to the site because it is within a rapidly growing residential community and near schools, shopping and rail links,” Fritzsche says.

LEAD Childcare was established more than 10 years ago and owns and operates 15 child care centres throughout Queensland.

LEAD’s new Mango Hill childcare facilities are expected to open this time next year.