Australian Childcare Property Market Continues to Surge with $205 Million Transacted in 2025 – Stonebridge Property Group

Photo: Edge Early Learning Morayfield (Brisbane) was sold for $7,847,777 achieving a yield of 5.26%

The Australian childcare property market has continued to experience a significant surge in 2025, with childcare transactions totalling approximately $205 million: Key Insights from Stonebridge Property Group

The Australian childcare property market has continued to experience a significant surge in 2025, with childcare transactions totalling approximately $205 million. The latest data reveals compelling insights into market trends, investor behaviour and outlook on the sector.  

Childcare investments remain a highly sought after asset class with Q1 transaction volumes affirming investor confidence in the childcare sector. Stonebridge data shows a 58% rise in transaction volumes in Q1 2025 compared to Q1 2024, with Stonebridge National Portfolio campaigns witnessing a 25% increase in enquiry across the corresponding period.

Tom Moreland, Partner at Stonebridge Property Group commented “This growth highlights renewed investor appetite for secure, passive commercial investments prompted by uncertainty in equity markets and the expectation of further interest rate cuts. Additionally, unwavering and increased Federal Government support across the recent election cycle has reinforced the important of the sector, in turn driving increased market participation from private investors for freehold investments. “

Sustained Government Investment into the Childcare Sector Remains a Key Driver of Capital Flow into Childcare Property. Release of the 2025-26 Budget highlighted that expenditure on the Child Care Subsidy (CCS) is predicted to exceed $16 billion, with another $5 billion allocated to building a universal early childhood education and care (ECEC) system.  

 Industry Revenue has Grown at 6.7% p.a. Over the Past Five Years¹, and is expected to reach an estimated $22.3Bn in 2025. Strong revenue growth and continued sector expansion, supported by substantial government funding and persistent demand for childcare places, instil confidence in property investors. The asset class is viewed as a secure investment offering attractive risk-adjusted returns, with operators seen as more resilient and less exposed to financial pressures.

Replacement costs, shaped by current market dynamics, are providing additional confidence in investors across the market. Rising construction costs have escalated the cost of new developments, making existing assets increasingly valuable. For investors who can acquire properties below replacement cost, the investment case is even more compelling – offering both inherent value and strong potential for long-term capital growth.

Investor momentum is building for the balance of 2025, with many groups poised to re-enter the market. The investor base for premium childcare assets has predominantly consisted of private and family office capital. While institutional investors have taken a more cautious investment approach throughout 2023-24, we expect a renewed inflow of capital from larger investment groups as they look to rebalance portfolios amidst an improving debt environment.

Australia’s strong population growth and increasing workforce participation continue to place pressure on the government to support affordable and accessible childcare. This, in turn, is enabling greater workforce engagement among families and drives increased demand for childcare services.

Outlook for 2025: Continued Momentum into Year Ahead

Supportive economic trends and market conditions aligning, the childcare property market is well-positioned for sustained growth in 2025

• Strong population growth and workforce participation is placing onus on the government to continue investing in the Child Care Subsidy (CCS), as outlined in the 2025-26 Australian federal budget
• Premium, long term leased assets are maintaining their investor appeal amid shifting economic conditions
• Historically, equity market volatility has driven an increased flow of capital into commercial property
• Anticipated interest rate cuts, improving investor confidence and borrowing capacity

“We continue to see strong demand for childcare property investments across Australia,” said Michael Collins, Partner at Stonebridge Property Group.

“In 2025 alone, Stonebridge has successfully transacted over $115 million in childcare property. Some key transactions include the sale of Giggle & Learn Belmore in Sydney which sold for $5.42m achieving a yield of 4.23% and the recently developed Edge Early Learning at Morayfield, north of Brisbane, which was sold to a private interstate investor for $7.85m reflecting a yield of 5.26%.”

Partner and Head of Asia Practice at Stonebridge Property Group, Kevin Tong commented “several of our transactions in 2025 have been sold to Asian investors on a site unseen basis. This reflects the ongoing rhetoric around the strength of the childcare property market in Australia, which is increasingly viewed as a safe-haven asset class.”

Keving Tong added, “Historically, these buyer groups have allocated capital towards supermarkets and larger retail assets, drawn by their strong underlying fundamentals. That same investment logic is now being applied to childcare assets, where similar fundamentals are increasingly being recognised.”

Stonebridge’s upcoming June Portfolio, launching will showcase 9 premium childcare investments across the country, headlined by: Saltwater Preschool in Newport on Sydney’s Northern Beaches, Edge Early Learning located in Southbank, inner-city Brisbane and Journey Early Learning in Seymore, Victoria.

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¹ IBISWorld