Childcare centres back in vogue among investors

Thursday 16 May 2019

Investors spent almost $8 million on two childcare centres in regional Queensland at an auction on Wednesday, in a sign of renewed confidence in the specialist sector after warnings last year of a glut of new supply.

In Buderim on the Sunshine Coast, a Sanctuary Early Learning centre sold for $4.11 million on a net yield of 6 per cent while further north in Port Douglas, a Petit Early Learning centre sold for $2.8 million on a 7.1 per cent yield.

Both properties came with 15-year leases, and were offered as part of a Burgess Rawson portfolio auction, where 11 out of 14 properties sold under the hammer (a 79 per cent clearance rate) and generated just under $17 million in total sales.

Burgess Rawson agent and childcare specialist Natalie Couper said a total of 60 bids were placed on both childcare centres.

Last year, many investors steered clear of childcare centres due to fears of a glut after oversupply warnings by ASX-listed G8 Education.

These oversupply fears have now eased, with sentiment about the asset class given an added boost by a generous taxpayer-funded childcare package announced by Labor leader Bill Shorten last month.

Alongside the two childcare centre sales, the portfolio auction also generated sales across the retail property spectrum in suburban and regional locations.

An orthodontics clinic in Caroline Springs in Melbourne’s western suburbs with a 10-year lease sold for $1.56 million on a 6.1 per cent yield while a medical and dental clinic in Broadmeadows in the city’s north sold for $1.45 million on a 6.2 per cent yield.

Regionally, a Tradelink DIY store in Warrnambool sold for $1.76 million on a 6.7 per cent yield while a Dahlsen Trade Centre in Deniliquin sold for $902,000 on a yield of 10.3 per cent.

Burgess Rawson director Shaun Venables said the results demonstrated it was “business as usual for decent passive investments”.

“Results were probably a little softer than 12 months ago, but we saw the gap between vendors and buyers close largely due to the election and banks being difficult,” he said.

To find out more about the properties in our portfolio, and how we can help you with sales, leasing and property management services, please contact us.

Written by Larry Schlesinger for the Financial Review

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