For childcare , this demand continues nationwide
• Outgoings will be paid by the tenant ; there are high despite the halt to population growth and the net standards and regulations around the condition migration losses of New South Wales and Victoria to the of childcare assets , this is the responsibility of the ( COVID-19 ) safe havens of Queensland and Western tenant and should be built into the lease agreement . Australia . Further fuelling interest in the childcare sector Similarly , other outgoing such as council rates , and stimulating not only investment but the ongoing land tax and utilities should all be included in development of assets was the Federal Government ’ s your agreement . increases to the childcare subsidy as announced in this
• Financing may be a little more difficult compared year ’ s budget . It ’ s expected that this will aid in further to other assets , the lender my impose differing growing occupancy levels which had been impacted by loan value ratio requirements ( however childcare the increased cost to families in recent years . is far better than other alternative assets such as service stations ) which could alter the amount you
During 2021 to date we have recorded more than can borrow . $ 220 million in transactions across Australian childcare centres as investors scrambled to successfully purchase , • Supply is key to consider in your local area ; with while fear of missing out ( FOMO ) is driving new lows limited population growth expected in the short term , in yields . With demand levels not dissipating as auction new facilities opening in your area could impact the assets attract record bidder numbers and investors have occupancy and viability for your operators . Speak to greater certainty around occupancy and income stability the local council to find out more about what may be after the subsidy announcement , interest now has moved proposed in your immediate area . from the private buyer to institutional and foreign groups
• Consider the location ; in the rush to secure an asset all vying for a piece of this attractive asset class . As a don ’ t forget the important fundamental of real estate , result , we have seen many investors move up the risk location , location , location . Growing areas will ensure curve in the rush to secure one of these assets resulting longevity in your occupancy level which means in a narrowing in yield range and more significantly the stability of income and potential capital growth . average between metropolitan and regional properties . With COVID-19 aiding in the movement of some of • Research ; look to find out what other similar sized the population to regional parts of the country , this has and quality assets have sold to get a greater idea of spurred on confidence in assets in these less populated value and don ’ t let FOMO take over . regions bringing investment yields close to on par to
• The demand for childcare assets over the last year metropolitan sales in some states . has been unprecedented with enquiry levels at a high and assets transacting at low yields . While the
Things to watch when purchasing a childcare asset : bulk of assets which have sold across Australia are
• Just like buying most commercial tenanted within metropolitan areas , the appetite of buyers has investments , you are purchasing the property not grown to include regional assets which historically the business , however in some cases this is on offer were discounted reflecting the increased risk . together as a going concern , so be aware of what you We continue to see this gap narrow as the weight of are purchasing . funds in the marketplace create greater competition and push prices which will be further stimulated
• Check the lease and licence agreements ; childcare by the increase in Federal Government subsidy for assets are subject to stringent regulation regarding childcare users . the number of children and occupancy standards . Be certain what these are and whether the tenant is adhering to these agreements as your income is often tied to them .
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