Government’s Covid-19 response drives $200m childcare listing

Twenty Victorian childcare centres will be sold off in a single, $200m package as government support for the industry spurs investor demand.

But a leading parents advocacy group has questioned whether federal funds are achieving their goal if they ultimately benefit investors.

Allaf Property is selling 21 new childcare properties it is building, all but one in Victoria, opting to hand them all over in a single nine-figure deal rather than selling them piecemeal.

The group specialises in childcare centre development and director Ayman Allaf said investors had recognised the industry’s long-term stability as well as “ongoing federal government funding”.

“Increasingly, families need two incomes to manage mortgage repayments so the need for quality childcare services will only grow,” Mr Allaf said.

The 20 sites, and another in Western Australia, are all currently under construction and were planned before the pandemic. All are already leased, most for 15-20 years to operators such as Think Childcare and Explorers Early Learning in various Melbourne suburbs.

During lockdowns last year the federal government bankrolled the industry, and in this year’s budget announced $1.6bn for universal four-year-old kinder access.

A further $1.7bn in government money will be spent on childcare over the next five years with parents of two or more children in care getting an up to 95 per cent rebate for the youngest child.

CBRE healthcare and social infrastructure director Sandro Peluso is working on the sale and said a growing number of major funds and investment groups were eyeing childcare sites.

“If you cast an eye back to the first and second lockdown, the government showed their hand and that they will do everything possible to keep the sector alive,” Mr Peluso said.

“And that has shown the market the government will support it through a one-in-100 year pandemic.”

It is possible the 21 childcare centres will wind up owned by a wealthy international group, he added.

But The Parent Hood executive director Georgie Dent said with half of long-day care providers in Australia run for profit, strong interest from investors was a warning sign the services were overpriced and advocated a review of how the industry was supported.

“Early education centres are seen as viable investments because of the government guarantee, but we need to ask if that’s the best use of the government money if it’s ultimately benefiting investors,” Ms Dent said.

“Families are making decisions to limit their work or not send their children there because the cost is so prohibitive. For many, once the costs are considered, it’s not worth it.”

“We also know that fees for early education and care have risen rather steeply over the last couple of years.”

The goal should be a system that encourages parents to use childcare services and return to working, providing a wider economic boost, she said.

An expressions of interest campaign for the 21 centres closes at 2pm on August 11.

Commercial agents Savills and Burgess Rawson are working with CBRE on the listing.