Investors zero in on Geelong childcare centres

Thanks to the “set and forget” nature of childcare investments, and long leases, savvy investors have a growing appetite for sites around the country.

One such site, Sparrow Early Learning, Lara, at 31-33 Station Rd, has hit the market with price expectations from $4.6 million to $4.85 million, according to Burgess Rawson agent Adam Thomas.

“We’ve sold $250 million worth of childcare centres in the last year nationally,” Thomas says.

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“The last regional centres we transacted in Bendigo between 6.2 and 6.4%, and dollar values between $3.5 million and $5 million, they were all bought by (Australian) investors.”

The site is leased for $292,500 a year, with 3% fixed annual rental increases.

The childcare centre at Lara near Geelong is licensed for 130 kids.

“Investors just want long-term secure income, and childcare is a non-discretionary market and they’re seeing both the demand for childcare, but also long-term secure leases to national providers at the same time,” Thomas says.

The site has three five-year options in place past its 20-year lease and is supported by a 3792sqm land component.

The building has a 847sqm footprint and is licensed for 130 children.

“The business and the inherent value of the business underpins the investment, plus the guaranteed rental increases with generally new buildings benefiting from significant depreciation benefits,” he said.

The last childcare to sell in the region was Bambini Early Learning in Newtown, which set a record for regional Victoria at $5.5 million.

This article from The Geelong Advertiser was originally published as “Second childcare centre around Geelong to hit the market in a year, price hopes north of $4.5m”.