As some traditional asset classes face yield pressure and increased volatility, a new report from Cushman & Wakefield reveals that Australia’s childcare property sector is evolving into a mature, data-driven, and resilient market.
Once a niche play for yield-chasers, childcare real estate is fast becoming a core social infrastructure asset, underpinned by stable demand, long lease terms, and strong demographic tailwinds.
HIGHLIGHTS
Participation and demand are still rising
From 2010 to 2024, the number of children aged 0–5 attending centre-based childcare grew by 60%, reaching 910,208 nationally. The participation rate has climbed from 34% to 50% in the same period, reflecting rising female workforce participation and the increasing need for dual incomes across Australian households.
Supply is growing—but so are costs
The number of centre-based care facilities surged from 6,862 in 2016 to 9,472 in 2024—an average annual growth rate of 4.1%. At the same time, average hourly fees have risen 84% since 2012 (from $7.10 to $13.05), and rents per licensed place now range from $1,100 to over $10,000 depending on location, with Sydney commanding the highest.
Macro trends support long-term growth
There has been a significant shift in the participation rate of 0-5-year-old children attending formal centre-based care. From 2010 to 2024, the 0–5-year-old cohort has seen a 60% increase in children attending centre-based care, now at 910,208 as of 2024.
Jake McKinnon, Associate Director, National Research at Cushman & Wakefield and author of the report said the Australian childcare market remains a highly attractive asset class, underpinned by consistent investor confidence.
“Despite a brief slowdown during the pandemic, the sector showed remarkable resilience, with investment volumes rebounding by 162% in 2021 to reach $950 million. Strong momentum continues, with 2024 transactions already totaling $720 million, reaffirming long-term growth and stability in this essential service sector."
The Childcare participation rate saw a similar trend, increasing from 34% in 2010 to 50% in 2024. An increasing participation rate coupled with population growth, further strengthens demand for Australian Government approved childcare services.
The 0–5-year-old population is projected to grow by 30% by 2044, from 1.87 million to over 2.42 million. Meanwhile, the number of dual-working couples with dependent children has increased by 73% since 2000, rising from 1.1 million to 1.9 million in 2024, directly fueling demand for formal childcare.
As identified in the Productivity Commission in their annual Report on Government Services 2024, average hours of attendance for children aged 0-12 years at Australian Government-approved centre-based care services has risen from 25.6 hours per week in 2011 to 34.1 hours per week in 2024.
This coupled with a growing population and an increased participation in childcare has helped drive industry revenue, establishment of new centres and overall demand for childcare services.
When looking at the increases in participation, number of children and the hours attended this has led to a 112% increase in the number of hours attended each year.
Mr McKinnon says Australia is moving from a phase of expansion to one of precision. “Catchment analysis, operator performance, and locational strategy are now essential for operators and investors alike. This isn’t just about scale - it’s about sustainable growth.”
The report also highlights the trend toward longer lease terms and more secure triple net lease structures. Initial terms of 15–20 years with options extending up to 30 years are now commonplace, helping investors lock in stable returns in an otherwise uncertain market.
Daniel Cullinane, National Director, Head of Investment Sales, QLD at Cushman & Wakefield, said "Childcare assets continue to prove highly attractive to investors due to their resilient fundamentals and strong underlying demand. These properties are typically underpinned by long-term leases to reputable, nationally recognised operators, providing secure and predictable annuity-style income streams.
“In an environment where stability and reliability are paramount, investors are increasingly drawn to the sector’s defensive characteristics, as well as the essential nature of the service it supports."
The federal government has made its intentions clear by supporting more females returning to the workforce. At a macro level this will further support ongoing demand, whilst creating additional demand for formal childcare.
According to the report, the sector’s revenue is forecast to grow from $21 billion in 2024 to nearly $26 billion by 2031, with annual growth stabilising between 2.7% and 2.9%.
While the post-pandemic rebound has passed, structural drivers—population growth, workforce shifts, and government policy—will continue to underpin demand. Yield softening seen in 2023–24 is expected to plateau as interest rates fall, offering renewed consistency for long-term investors.
Meanwhile, the $1 billion Building Early Education Fund and wage increases for educators are expected to boost operational resilience, particularly in underserved regional markets.
The Albanese government has proposed transformative measures to make childcare more accessible and equitable, providing cost of living relief to Australians.
KEY INITIATIVES INCLUDE:
- Childcare Subsidy (CCS) Changes: Increased income thresholds and subsidy rates.
- Removal of Activity Test: Guarantees access to subsidised early education for all families.
- Building Early Education Fund: $1 billion fund to construct and expand childcare centres, focusing on underserved regions.
- Wage Increases for Educators: 15% pay increase to attract and retain qualified professionals.
"If state government initiatives take effect, they could help unlock significant opportunities in the childcare real estate market - from increased enrolment driven by enhanced subsidies and the removal of the activity test to new investment prospects through the Building Early Education Fund targeting regional areas” said Mr Cullinane.
“Additionally, wage increases for educators may boost workforce stability and service quality, making childcare investments more attractive and sustainable" he continued.
Looking ahead, Mr McKinnon said the easy wins of early yield compression are harder to find at present. “But in a property world searching for stable returns and low volatility, childcare still stands tall.
“With policy backing, demographic strength, and long leases, this sector remains compelling—if not for everyone, then certainly for the informed.
“Investors willing to dig into the data and partner with quality operators will find that the playground still offers plenty of room to grow” he said.
