This article is from the Australian Property Journal archive
DEMAND for childcare facilities across the country has surged to a new peak, drawing investor interest with revenue expected to grow by 6.2% over 2023-24.
A new research report from Colliers WA shows demand has been boosted by population growth and both parents returning to the workforce. With ABS data showing Western Australia’s total population of children under four years old was at 169,000 in the year ending June 2023.
This population in WA is expected to expand by 6.5% by 2031 and is expected to create growth opportunities in the childcare industry.
“We are seeing an uptick from childcare operators looking to acquire suitable sites to develop new centres. The importance of location for any new centres will determine the demand, revenue, daily operation, and the ultimate success of the centre,” said James Baker, director of investment services at Colliers.
“Childcare centre catchments are typically with 5km of homes, place of work or schools. With the growing labour force participation, a key driver to childcare development is the ease of which parents can drop off and pick up children before and after work.”
The childcare market is highly attractive to all kinds of investors, including high net worth individuals and A-REITS, despite staff shortages, government regulations and inflationary pressures.
“The childcare market has been highly desirable by a range of investors in Western Australia. Institutional and private investors have capitalised on childcare investments in the past two years, expanding their portfolios and development pipelines with key assets in WA,” said Richard Cash, state chief executive for WA at Colliers.
The industry is forecast for revenue growth of 6.2% in 2023-24, after being accelerated by the changes in the Childcare Subsidy.
While revenue is expected to grow by 3.1% per annum over the five years to 2028-29 to an estimated $20.3 billion nationally, according to IBISWorld.
