October 2021 Newsletter

Childcare centre sales and leases. Demand is ‘running hot’

Childcare centre sales are in demand, underpinned by government support
Childcare property delivers stable and strong yields
Year to date sales volumes in 2021 have exceeded that in 2020

Childcare centre sales are in demand in Australia. Fuelled by ongoing demand for places and secure
incomes, the sector has become a sought-after asset class over the last five years.
According to property researchers at JLL, the volume of childcare centre sales to August 2021 had
already exceeded all sales in 2020. More than $170 million of assets had settled from January to
June.

Childcare Concepts Founder Phillip Malek said the market for childcare businesses and property was
unprecedented.

“The market is running hot right now,” he said. “I’ve been in the industry for two decades and I’ve
never seen so much demand for childcare.
“Government support for the sector, the buoyant property market and the entry of corporate
players into the sector are really fuelling sales and prices.”

The childcare centre sector has become increasingly attractive due to its “essential industry” status
and growing demand.The proportion of children younger than five who attend childcare in Australia is growing steadily. A
decade ago it was 39 per cent. At the end of 2020 it was 45 per cent.

During lockdown periods in Australia throughout 2020, the Australian Government provided almost
$3 billion in additional support to the childcare industry, acknowledging centres must remain open
as an essential service to maintain the national economy.

Both sides of politics maintain support for the sector due to the strong productivity gains it
generates.

Mr Malek said these factors combined to make childcare an extremely resilient industry.
“Childcare businesses have demonstrated their strength during the COVID-19 pandemic and the
restrictions to reduce its spread,” he said.
“The Australian Government acknowledged just how critical it is in terms of keeping the economy
moving. And with more and more demand for places, childcare is proving itself to be recession-
proof.”

Against this backdrop, childcare commercial properties for sale have been increasingly sought after
as an alternative asset.