8 reason why childcare assets make good investments
The future looks bright for childcare centre investments as the demand for quality and affordable childcare places is unlikely to slow down any time soon.
Here are 8 reasons why you should consider investing in childcare assets:
1. Quality operators with long and secure leases
Childcare centres boast quality operators and host blue chip tenants such as ASX listed G8 Education at 38-40 Wainewright Avenue, West Hoxton. This property, recently put on the market is an example of a key asset where investors can be confident in a long and secure lease.
2. Federal Government support
Under the proposed federal Budget (to be implemented from 1 July 2017), families earning up to $65,000 will be able to receive up to 85% off the cost of their childcare back in subsidies. This rate reduces with higher incomes, with families earning over $170,000 potentially receiving 50% back. This may push up demand for childcare even further, and is also likely to create some great business opportunities for childcare providers and owners to make healthy profits.
3. Strong underlying businesses
Childcare centres boast strong underlying businesses with regular increases in daily fees over the last 10 years.
4. Comparatively large sites with high underlying residential land values
Childcare centres often occupy large sites within residential areas. Zoning of these properties often permits (without consent) the conversion to residential uses.
5. Attractive returns compared to other investment classes
Childcare assets offer attractive returns over the medium to long-term compared to other investments such as residential property.
6. Over 1.2 million children in Australia using some form of childcare
Government data (from September 2015), indicated demand for childcare continues to grow with 1,269,190 children attending approved childcare services in Australia, up by 5.7% from the previous year. Long day care attendance contributed for over 53% of all children in some form of childcare.
In addition, according to IBIS World, a baby boom is coming – with the rate of births expected to increase by 6.4% over the next few years as the workforce ages.
7. Unaffected by offshore economic factors and the internet
The demand for childcare in Australia will remain strong, providing local investors the opportunity to diversify into an asset sector unaffected by offshore economic factors. Additionally, the internet will not make childcare centres redundant as they will remain an essential service unlike in other industries.
8. Burgess Rawson’s market leading expertise in this popular asset class
For more information on childcare assets and opportunities feel free to contact us.