Childcare Fundamentals Remain Strong

There are few better indicators of the strength of a property class when major players are pouring money into developing new assets or buying up existing ones.

So as a commercial property agency specialising in childcare, it’s incredibly encouraging to see some of Australia’s leading early education providers making significant moves this week to solidify and expand their position in the Australian market.

First we saw Think Childcare tapping investors for $18 million in funds to acquire four childcare leaseholds in Perth as it seeks to expand its upmarket Nido brand. The company also revealed plans to acquire a further seven centres later this year, 16 next year and another 46 in 2021 and 2022, according to the Australian Financial Review.

It’s a clear sign of the underlying confidence in childcare moving forward.

And then ASX-listed Mayfield Education gave a strong indication that it, too, believes childcare has significant ongoing upside, hinting at a raft of potential acquisitions throughout 2019.

With industry giant G8 Education’s stock soaring in the first quarter of 2019, after hitting a low of $1.91 in October, it’s clear that childcare providers believe the buoyancy we saw in the market in 2016 and 2017 is on the way back.

Why?

Firstly, demand for childcare is going nowhere but up in the coming years, with the number of Australian families continuing to grow by the day.

And childcare is now eminently more accessible, after the Federal Government’s July rollout of the first part of the nationwide Child Care Subsidy (CCS) that has seen parents out-of-pocket expenses reduced significantly.

Federal Labor’s $1.75 billion pledge to fully fund a three-year-old kindergarten programme for 15 hours a week – in addition to four-year-olds, which are already funded – puts further impetus on the need for more centres, and solidifies the certainty existing providers already have, while another pledge to remove upfront course fees for 10,000 early education TAFE courses will be a huge shot in the arm for staff numbers, which remain critical to the industry’s viability.

Positive sentiment around childcare has gathered pace in early 2019, and with many providers now on the march to increase their foothold, it’s a big tick of confidence for the industry as a whole.