Australia’s childcare centre market is poised for growth in 2023, with increased government investment, growth in the nation’s younger population and expected industry consolidation creating a positive outlook for the asset class, new research shows.
Cushman & Wakefield‘s report, Child’s Play: An Overview of the Australian Childcare Real Estate Investment Market, reveals investment into childcare centres is anticipated to persist throughout the year. Several centres are expected to hit the market in the coming months following the $520 million in centres traded in 2022, 30% above the pre-Covid averages of approximately $400 million.
The research also reveals that strong demand for childcare services amid sustained population growth, and competition for quality locations has led to rents rising 47% on average nationally over the last decade.
Demand from high net worth, institutional, and foreign investors has also contributed to ongoing yield compression. Yields for city-based centres continued their long-term compression, falling from 6.8% in 2014 to 4.9% in 2022. For centres located outside of cities, average yields compressed from 7.2% in 2014 to 5.3% in 2022.