Demand is centred on modern, purpose-built centres in major growth corridors and regional population hubs with long leases to established national operators.
Stonebridge Property Group Partner Tom Moreland said investors were increasingly backing childcare assets in suburbs with strong population growth and limited existing supply.
“Government support through the Child Care Subsidy provides a stable revenue environment for operators, while Australia's growing population is driving long-term demand for services,” Mr Moreland said.
“In growth corridors like South East Queensland and Western Sydney, buyers have a strong conviction that demand will only increase as young families continue to move into expanding communities, and modern centres leased to established operators are well-placed to capture that.”
Cost and Scarcity Drive Value
Planning constraints, construction pressures, and extended approval timelines have made it more expensive to deliver compliant, purpose-built centres.
For investors, that has translated into a greater appreciation of what a completed, tenanted asset is actually worth.
“What’s reinforcing that investor conviction is the growing recognition of how difficult and costly it is to deliver new childcare supply today,” Mr Moreland said.
Stock scarcity is adding further pressure, with demand consistently outweighing the volume of childcare properties coming to market.
“The supply of premium childcare freeholds is inherently limited, and once acquired, owners tend to retain them for long periods given the secure income, annual rental growth and favourable demographic tailwinds,” he said.
“With constrained new delivery and an investor base that rarely sells, the supply of quality assets coming to market is genuinely limited.”
Griffin Sale Sparks Fierce Competition
A recent childcare sale in Brisbane’s northern growth corridor highlighted the depth of investor demand for well-leased properties.
A Goodstart Early Learning centre at 60 Wesley Road, Griffin, sold for $7.7 million at a 5.30% yield following an on-market campaign that attracted more than 135 enquiries.
The 110-place centre was completed in 2021 on an approximately 2,400 sqm site opposite Griffin State Primary School.
The property is leased on a 15-year net basis until 2035, with options extending to 2055 and CPI-linked annual rent reviews.
Mr Proberts said the campaign attracted buyers seeking exposure to fast-growing outer metropolitan markets where childcare places are in short supply.
“Griffin is one of Brisbane's fastest-growing residential corridors, and the suburb currently has a childcare demand ratio of approximately 3.3 children aged 0 to 5 for every available place, so the underlying need is clear,” Mr Proberts said.
“Combined with a modern purpose-built facility, a long-term lease to Australia’s largest childcare provider and a prominent location directly opposite Griffin State Primary School, the asset ticked every box for investors seeking exposure to South East Queensland's growth story.”
No Slowdown in Sight
Competition for well-leased childcare properties is expected to remain strong over the next 12 to 24 months, driven by limited new supply, rising building costs and continued population growth.
Mr Morel and said investors would likely stay focused on assets offering secure income and exposure to growing family catchments.
“The key drivers behind results like Griffin, being constrained supply, rising replacement costs and structural demand from growing family catchments, remain firmly in place and we don’t see that changing over the next 12 to 24 months,” he said.
“Modern centres leased to established operators in high-growth corridors will continue to be the most sought-after opportunities, and for those assets, pricing is expected to remain firm and buyer competition strong.”
