Investment in ECEC surges as yields tighten and market strengthens

The early education property sector has been gaining momentum in recent months, with yields dropping 42 basis points, firming from 5.69 per cent in the first half of 2024 to an average of 5.27 per cent in the second half, the latest analysis from early childhood education and care (ECEC) focussed real estate broker Burgess Rawson has found.

Burgess Rawson has been at the forefront of this trend, brokering almost $240 million in early education property sales throughout 2024, supported ably by Partner, Adam Thomas and Childcare Director, Michael Vanston.

“We’ve seen robust activity across the nation, highlighting the appeal of early education assets. Investors are recognising their stability and growth potential, particularly in NSW where yields tightened in the second half of 2024, with a number of recent sales reflecting returns closer to 4.0 per cent,” Mr Vanstone said.

“Investors are increasingly adopting land banking as a strategic approach within the early education sector. By acquiring land in high-growth areas and more recently established residential neighbourhoods with strong value appreciation, they position themselves to benefit from the long-term reliable income stream into the future.” 

Key transactions in New South Wales include the Advanced Early Learning Centre in Merrylands, which sold for $7.4 million at a sharp yield of 4.33 per cent, and the Woongarrah Early Learning Centre, which fetched $7.46 million. 

The Affinity Education site in Budgewoi was another standout, selling for $3.2 million at a 4.74 per cent yield.

Overall, in the past two months, yields have firmed even further, Mr Thomas said, noting several transactions which achieved sub-five per cent yields, underscoring the strength of the sector and the confidence investors have in these assets as stable, long-term investments.

Queensland also contributed to the sector’s strength, highlighted by the Chatterbox Centre in Tillot Street, Dutton Park, which achieved a $5.38 million sale at a yield of 4.84 per cent, and Edge Early Learning in Cannon Hill, which sold for $8.7 million.

Other Queensland deals include two Goodstart Early Learning Centres in Highland Park and Beaudesert which sold on sharp yields of 4.16 per cent and 4.34 per cent respectively.

“Assets backed by nationally recognised operators are particularly sought after, as they offer long-term security and reliable income streams for investors,” Mr Thomas explained.

“With interest rates forecast to decline in the coming months, we expect to see even more investor confidence in the early education sector, which would likely result in further tightening of yields and increased demand for these types of assets.”

Learn more about Burgess Rawson’s upcoming sales here.