Why childcare centres are a hot commodity

By Grace Ormsby 19 March 2021 | 1 minute read

Childcare centres are the new service station, according to a commercial real estate agent.

Why childcare centres are a hot commodity

RE/MAX commercial real estate specialist Deepen Khagram has reflected on the current investment landscape, noting investors are turning to long-term tenanted investments in the post-COVID-19 property market.

He said: “In the current low interest rate environment, investors are chasing tenanted investments with the long-term leases.”

Recent market sales have shown the return on investment to be similar in both asset classes, he flagged.

“Childcare centres, like service stations, are seen as a safe and recession proof asset class because working parents will always need such facilities to take care of their children.”

According to the agent, investors are looking for “reputable” childcare centres operating on long leases of 10 to 15 years-plus that also post strong annual reviews.

He also flagged interested buyers as after investment opportunities where the childcare operators are the ones who hold responsibility for outgoings – such as land tax.

“In order to get the highest and best price, an investor will be seeking assets that have long tenure and located on large parcels of land with commensurate catchment area to support either asset class,” he explained further.

The commercial agent’s comments come after he settled two childcare centres sales; one was a $1.8 million sale of the Bribie Island Childcare Centre, while the other was a $2.03 million sale of Karana Downs’ Sparrow Nest Early Learning.

He said: “Assets like this tick all the boxes so are well sought after and don’t last long in the low-interest environments.”

Even with the recent increasing popularity of the asset type, Mr Khagram said it’s not unexpected: “When an asset is said to be strategically located for the long term, it will always generate a high selling price.”

He’s expectant of huge demand from investors who have money readily available, or ready access to money, looking to invest immediately over the remainder of 2021.

As a result, he expressed: “It is imperative that I understand each of my client investment mandates and match the appropriate assets to suit the investor.”

About the author

Grace Ormsby

Grace Ormsby

Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and... Read more

Why childcare centres are a hot commodity
Why childcare centres are a hot commodity
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