Western Australia’s Population Growth Drives Continued Demand for Childcare Services in 2025

Western Australia, one of only two states to see both positive and interstate migration in the past year, offers a promising outlook for the 2025 childcare market.

According to the recent Colliers Premium Investments National Research Report, Childcare assets recorded the second largest proportion of sales activity across the premium investment sectors over the last 18 months accounting for 18% over 2023 and so far over 2024.

Western Australia is one of only two states that have experienced both positive and interstate migration over the past 12 months. This, combined with increased demand for essential services, continues to attract investors looking to capitalise on the state’s population-driven growth.

Colliers Research Manager Western Australia, Yashwini Halai said “The recent surge in demand for childcare services across Australia has been driven by population growth and more parents entering the workforce, which has attracted significant investor interest. As of March 2024, there were approximately 169,500 children under the age of four in Western Australia, representing 5.7% of the total population in the State (ABS).”

Childcare facilities continue to draw interest from investors due to positive aspects such as secure leases, long WALE, stabilised asset, Government subsidies provided, industry support, strong rental growth and typically, properties that are strategically placed on well-located sites.

According to Colliers Investment Services Executive in Western Australia, Aidan Austen, the sector has been extremely competitive in recent years, driven by the increasing need of both parents returning to work combined with significant government subsidising assistance solidifying a Childcare investment as a secure long term investment, ultimately resulting in heavy buyer demand and large transaction volumes.

“The WA Childcare market has a positive outlook and remains appealing to investors in Western Australia with $105,814,000 worth of transactions in Western Australia alone being exchanged this year to date. Ultimately, we are seeing high quality tenant covenants in combination with strategic high growth locations generate sharper yields” Mr Austen said.

“Investor demand for Childcare assets over the last 24 months has not only resulted in high transaction volumes but a significant uplift in rental rates per licensed place. Centre’s that opened their doors in 2019 would’ve begun operation with rates of $2,400 – $2,600 per licensed place, moving forward to present time leases are being agreed upon at $3,750 – $4,000 per licensed place” Mr Austen added.

Colliers also states that yields in Western Australia have typically ranged between 6.00%-6.50% in 2024 to date and have long term lease terms of typically 12-15 years. Strong investor appetite is evident for newer centres backed by a high-quality lease covenants to experienced operators in locations with key demand fundamentals.

Colliers State Chief Executive WA, Richard Cash said “The childcare industry is considered an essential service and a secure property investment choice for many investors in Western Australia. We anticipate that the current strong demand will continue for this asset class into 2025.”

Mr Cash concluded “The supply of newly built centres is expected to remain high, driven by robust growth and renewed market confidence. With Western Australia’s increasing population figures, demand for childcare assets is projected to continue into 2025 and beyond, making it a defensive investment option.”