Childcare
As demand for early education grows, so does interest in childcare facilities as an investment. These properties offer stable returns, long-term leases and the security of a government-supported sector, making them a potentially smart choice for forward-thinking investors.
What is a childcare asset?
A childcare asset refers to property that is specifically designed, converted or operated for early childhood education and care services. These properties come in various forms, from purpose-built childcare centres to spaces incorporated into mixed-use developments or even residential homes repurposed for this function.
For example, a stand-alone childcare centre in a family-dense suburb may cater to local residents, while a facility within a commercial precinct could serve parents working nearby. The versatility of these properties makes them adaptable to different community needs, which enhances their appeal to investors.
In recent years, childcare facilities have experienced surging demand. Key drivers include federal government support through the Child Care Subsidy (CCS), the rise of dual-income households, and increasing awareness of the importance of early childhood education. As more families rely on these services, operators seek well-located, modern facilities to accommodate growing enrolments.
What is the future for
childcare assets?
Childcare assets are expected to continue thriving, supported by trends such as population growth, urbanisation and increased workforce participation. Australia’s growing population, particularly in urban and suburban areas, ensures a steady pipeline of young families requiring childcare services.
Government policies, such as the CCS, provide further stability to the sector by making childcare more affordable for families. This creates consistent demand for well-run centres, even during economic downturns. Moreover, as more women return to work, childcare facilities close to homes and workplaces are increasingly essential.
The future also holds opportunities for innovative childcare models, such as centres integrated into residential or commercial developments. High-density living and mixed-use precincts are likely to drive this shift, allowing investors to target areas with high foot traffic and family populations.
Why buy
childcare centres?
Investing in childcare centres offers numerous advantages. A key benefit is the stability they provide through long-term leases, which often extend over a decade or more. These leases typically include fixed rental increases, giving investors predictable returns. Moreover, the strong and growing demand for childcare services, driven by Australia’s demographic trends, makes these properties a savvy investment choice.
However, like any investment, success depends on understanding the market and conducting thorough due diligence. The location of the facility plays a critical role. Centres located near schools, in areas with high-density housing or in family-oriented suburbs tend to perform best. The quality of the operator is also crucial, as experienced operators are more likely to maintain high enrolment rates and ensure regulatory compliance.
To maximise your return, consider properties in areas with growing young families and low competition. Upgrading or renovating older facilities can also boost enrolments and justify higher rents.
Key considerations when
investing in childcare centres
When buying an existing childcare centre, you should review their enrolment numbers, both past and present, to gauge demand. Profitability is another key metric – assess the net and gross profit to understand the financial health of the business.
The condition of the childcare property itself is equally important. An ageing or poorly maintained building may require costly upgrades to meet safety and compliance standards. Other factors to consider include the rent being paid, the terms of the lease agreement and any developments in the surrounding area that might affect enrolment numbers, such as new housing projects or competing childcare centres.
For new builds, understanding the local demographics is critical. Areas with a high concentration of young families or proximity to schools are often prime locations for childcare centres. It’s also worth considering the location’s accessibility – as being near high-density housing or workplaces increases the likelihood of steady enrolments. Assessing expected rental income and proximity to other childcare facilities will help you make an informed decision.
Why buy with
Costi Cohen?
Buying a childcare property on your own can be challenging. Without expert guidance, you risk overpaying, missing zoning or compliance issues, or choosing a poorly located property that struggles to attract enrolments.
Working with Costi Cohen helps eliminate these risks. As one of Australia’s leading commercial buyer’s agencies, we provide market insights and a thorough due diligence process to ensure your investment is sound. From identifying the best locations to assessing enrolments, profitability and lease terms, we handle the complexities so you can invest with confidence.
Our process begins with an initial consultation to understand your investment goals. From there, we search for childcare properties that align with your criteria, conduct detailed evaluations and negotiate the terms on your behalf. By partnering with Costi Cohen, you’ll have a dedicated expert guiding you every step of the way.
How to finance
childcare investment
Financing a childcare property is similar to other commercial investments but comes with some sector-specific considerations.
Most lenders are comfortable offering loans for childcare facilities due to the stability of the sector. Typically, loan-to-value ratios (LVR) go up to 70%, depending on the location and financial performance of the centre.
A well-structured loan is key to maximising your returns. Working with a finance broker who understands the childcare property market can help you secure competitive rates and terms. Costi Cohen can connect you with trusted finance professionals to help ensure your purchase is as seamless as possible.
Explore some of our
Childcare Purchases
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Costi Cohen — Australia’s premier commercial real estate consultants
Whether you’re a seasoned investor or new to the market, our expertise will pave the way for your success in commercial real estate. We’ve looked after more than 250 commercial properties and are prepared to help you discover your next investment opportunity.
No matter your timeline, budget or preferred location, the expert team at Costi Cohen can help you find a commercial property that aligns with your needs. We invite you to get in touch with our team for a consultation today.
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