This article is from the Australian Property Journal archive
A PORTFOLIO of three Victorian childcare centres has sold for $35 million, including one of the largest deals the state has seen in 2024.
Headlining the trio of assets that sold through Stonebridge Property Group’s portfolio was a Doncaster childcare centre in Melbourne’s eastern suburbs that fetched $15.5 million.
Leased to Imagine Childcare, the 158-place childcare centre is located on a high profile 1,968 sqm site with a lease in place to the Imagine until 2037 plus options. Given the larger price point, the asset drew interest from a different buyer profile than traditional childcare investors with the purchaser being a private family based out of NSW.
The sale realised a yield of 6.05%.
Further east, a brand new Heathmont facility at 203-205 Canterbury Road received five first round expressions of interest offers and sold for $12,016,668, on a 5.83% yield.
The 139-place childcare centre is set across a 2,973 sqm site and carries a lease to national operator, Grow Early Education, through to 2043 plus options.
The property was ultimately sold to an offshore Chinese investor who is a first-time childcare buyer.
“We continue to see an ongoing shift from Asian capital towards childcare assets, particularly those occupying large metropolitan landholdings,” said Stonebridge Asia practice partner Kevin Tong. Four of the last six Victorian Stonebridge childcare centres have sold to Asian investors.
In Melbourne’s north-west, an established facility at 5-7 Clarendon Street in Avondale Heights leased to Nido Early School traded for $8 million at 5.79%. The property was sold to a locally based private investor who was attracted the national covenant and strong suburban metropolitan Melbourne location, Stonebridge said.
Rorey James, who negotiated the sale with Tong, said to transact a combined $35.52 million across the three properties “highlights the increasing market confidence we are seeing as we head towards 2025.
“Investors continue to acknowledge the buoyancy of the childcare sector, bolstered by unwavering government support for the sector and appreciation for long term leased assets with strong fixed rental growth.”
Stonebridge Property Group also recently sold off-market an Early Explorers Learning in Frankston North and Nido Early School in Seaford on behalf of HealthCo, which sold for prices of $7.5 million and $6.5 million, respectively.
Demand for childcare facilities has continued to pick up amongst high net worth investors and Australian real estate investment funds, in line with the growing population and workplace participation, according to Colliers.
In recent weeks, in Melbourne’s south-east, a childcare centre occupied by Only About Children has traded for $16.5 million, on a yield of 4.9%. The centre was purpose-built in 2017 and has a 20-year double net lease. CBRE did the deal.
Confidence in the childcare market is lifting amongst a wide range of investors, according to Colliers, after various challenges to the sector since the onset of the pandemic. Childcare sales totalled $389 million across 83 transactions nationally in 2023, reflecting a 9.8% increase from 2022.
Yields were typically ranging between 5% to 6% in 2023.
