Childcare Property seeing Strong Growth

4 November 2021

JLL’s latest Child Care Bulletin describes 2021 as a watershed year for the sector as more investors are drawn to the underlying fundamentals of the sector.

JLL’s Mark Stafford said “The buyer cohort in the child care sector has undergone a significant evolution over the past 12 months. Institutions, corporations and funds are actively raising capital to expand and diversify their portfolios away from more traditional asset classes and into the secure essential services market. This surge of new capital into the market has been the driving force behind new benchmarks being achieved and the shift in yields across Australia.”

October was another strong month for child care transactions in the market sector with $105,010,000 worth of assets transacting at an average yield of 5.06%. This slightly softer market yield, in comparison with the month of September, is attributed to the majority of transactions being contained within a portfolio of soon to be completed centres.

October saw the sale of a major portfolio of 12 child care assets for $98,000,000. The sale represented a yield of 5% with 11 of the 12 centres soon to be complete or currently under construction. A key point of interest from this transaction is the last two portfolio’s of ‘to be complete’ centres to be offered to market sold on average yields of 6.36% and 5.64%, both in 2017.

JLL’s yield tracker across the eastern states can be found below. The national average yield for the October was 5.06%.

Recent demand for child care assets has continued through October, with demand from new major players fuelling the
sharpening of yields. This is evident in the movement from the results of the ‘off-the-plan’ portfolios this month and in 2017.

Yields for these similar offerings shifted by 136 and 64 basis points respectively in the 4-years between the three portfolios. This shift has been spurred by the re-direction of capital towards essential service and government backed industries such as child care.

The JLL team is currently preparing to market a brand new boutique child care centre for market in Brunswick East with Mark Stafford and Nick Peden handling the process.

Featuring a brand new lease through till 2051, fixed in-built rental growth and a high quality operator at an affordable price point, the centre is sure to tick a number of key criteria for investors.

Recent Sales

  Address  Suburb  State  Sale Price  Sale Date  Places  Cost per place  Yield (%)  Tenant
1 Saffin CourtBannockburnVIC$7,010,000Oct-21126$74,1075.02%Happy Feet ELC
135-137 Peninsula RoadMaylandsWA$8,300,000Oct-21112$64,6155.01%Think Child Care
2 Pink Hill BoulevardBeaconsfieldVIC$8,400,000Oct-21130$85,2465.01%Explorers Early Learning
2 Crew StreetYallambieVIC$5,200,000Oct-2161$66,1545.01%Think Child Care
84-86 Hull RoadCroydonVIC$8,600,000Oct-21130$83,3335.04%Explorers Early Learning
5-7 Clarendon StreetAvondale HeightsVIC$8,500,000Oct-21102$89,2865.04%Think Child Care
255-257 Tucker RoadOrmondVIC$7,500,000Oct-2184$90,6255.01%Think Child Care
762-764 Whitehorse RoadMitchamVIC$11,600,000Oct-21128$64,4375.02%National Operator
2-8 Ballarto RoadFrankston NorthVIC$9,150,000Oct-21142$79,6705.02%Explorers Early Learning
44 Galway StreetSeafordVIC$7,250,000Oct-2191$89,7965.01%Think Child Care
321–323 Huntingdale RoadChadstoneVIC$8,800,000Oct-2198$68,7505.04%Think Child Care
23–25 O’Neills RoadMeltonVIC$6,050,000Oct-2188$78,6365.02%Story House Early Learning
11–15 Kimberley DriveChirnside ParkVIC$8,650,000Oct-21110$48,6364.92%Story House Early Learning