The childcare sector continues to shine as the star performer according to childcare and investment specialists, Burgess Rawson.
The agency that has led the way in childcare sales with over 120 centres sold in the last two years has analysed its sales and reports some market leading statistics.
Director Dean Venturato reports that sale yields and median values since 2012 are amongst the best of all investment properties sold. He states “We have recorded a drop in yields of 1.9% for both metro and remote regional locations to an average of 6.25% and an increase in median values of $900,000 to $2,750,000 per centre.” Adding “Buyers can’t get enough of childcare centres and they are voting with their dollars. Our auction attendances always spike when we offer childcare centres for sale.”
Buyer demand appears to be at an all-time high with purchasers favouring centres in capital cities with long leases to national tenants or those with multi centre operations. Michael Vanstone, the Sydney agency’s childcare specialist, sold centres last month in Bateau Bay NSW and Beresfield NSW. These centres were last sold in late 2014, Michael says “This time around, the centres attracted 220 enquiries and we issued 55 contracts. That’s 30% more than previous and they sold for yields that were half a percent stronger than
15 months ago.”
The trends show that superior centres in Sydney often produce yields of under 5.0% and in remote regional areas they can grow to around 7.0%. Adam Thomas, the Melbourne agency’s childcare specialist sold a centre in Cranbourne VIC last month for $3,590,000 at 5.85% which was still off the Melbourne best of 5.30%.
Mr Venturato believes the record for a Sydney centre which currently stands at 4.32% for a property at Haberfield will be seriously challenged next month when a Chatswood centre goes up for grabs. It has a new 15 year lease and a net income of $94,000 pa. “I wouldn’t be surprised to see it go under the 4.0%”.
Such is the level of activity in this sector that Burgess Rawson has a portfolio of seven centres being auctioned in early April with properties spread across New South Wales and Victoria. Mr Thomas said
“We continue to experience a steady supply of childcare centres for sale in each of our portfolio auctions.”
The agency notes that buyers for these centres are commonly split between “Mum & Dad” investors and individuals buying through their SMSFs. Mr Vanstone says “Investors see childcare centres as one of the safest places to park their money and with continuing levels of low interest rates and share market volatility, we don’t see this trend slowing up any time soon”.