When people think of growing markets and solid investments, they rarely consider childcare facilities as worthwhile, but that’s started to change with the increased interest from foreign investors to snap up childcare centres, with more investors interested in childcare than any other asset class, according to one investment firm.
Recently a childcare centre sold in Camberwell, in Melbourne’s Eastern Suburbs
drew more than 100 formal enquires, with 70 per cent of them coming in from overseas investors. The purchaser, who ended up being an investor from China, paid $2.3 million for it, which was more than $400,000 over the reserve price.
Strong government support for more childcare facilities has been a key driver in the demand for childcare centre investors, with many selling off the plan and prior to auction. A big part of this is guarantee of long term leases and statutory obligations for owners and renters alike to maintain a high quality facility for young children.
The increase in demand also comes off the back of the 2015 Federal Budget which promised $3.2 billion dollars of new spending to improve the affordability of childcare for low and middle income earners. Many investment firms believe that the trend for investors to add childcare centres to their portfolio will increase as a result of this.
The childcare centre in Camberwell will still be operated by a national group, the Affinity Educational Group, at an annual net rental of $344,986.