This article is from the Australian Property Journal archive
WHILST 2023 has been a muted year for the commercial property deals, agents Burgess Rawson has negotiated almost $200 million in early education sales over the first three quarters of 2023, as demand for the asset type surges.
Over the past nine months, early education asset listings have grown by 22% compared to the same period in 2022, according to Michael Vanstone, director at Burgess Rawson.
Burgess Rawson has negotiated 77% of Australian childcare centre investments over the last 18 months, according to the group’s partner and Queensland managing director, Adam Thomas.
“We also reached a milestone with more than $2.2 billion in early education transactions to date,” said Thomas.
Average yields recorded an increase to 5.3% in early 2023 and have since remained stable throughout the year to date, with the last 30 sales averaging 5.27%
Vanstone noted 2022 saw a slowdown as a result of confused messages from market commentators and the RBA and the expectation of further cash rate hikes.
“Despite the cash rate rises, lack of supply and increased demand for these defensive assets has reversed the trend and vendors see the opportunity to maximise on the positive market sentiment,” said Vanstone.
Rents per place in the sector have grown by nearly 15% since early 2022 and currently average $3,518 per place per annum, according to the Burgess Rawson Early Education Industry Insights report.
Rents have grown 87% in the last decade and by 27% since 2020, with rents in NSW up 46% since 2020 to average $3,696 per place.
“Over the last decade, sale prices have climbed exponentially. In 2012 you could buy an early education centre for $1 million. However, today they trade on an average of almost $6 million,” read the report.
Recent sales in the sector have included Jungle Zoo ELC in Mandalay, Queensland for $5.65 million, Bower Education in Kingswood, South Australia for $5.85 million and the Guardian Childcare in Seven Hills, NSW for $7.575 million.
While Queensland recently recorded its largest childcare transaction in over two years, with a Moreton Bay Region centre and swim school trading for $12 million, on a 5% yield.
