Vaucluse childcare sells at sharp 3.3% yield by Burgess Rawson from CBRE

A childcare centre in one of Sydney’s most exclusive harbourside suburbs has changed hands in an off-market transaction that has set a new national benchmark, achieving the lowest yield recorded for the asset class across Australia in the past two years.

The G8 Education-operated facility at 5 Billong Avenue, Vaucluse sold for $6.5 million on a sharp 3.31 per cent yield, with the transaction negotiated by Burgess Rawson from CBRE’s Michael Vanstone as a private off-market sale targeting specific investor groups.

The property had been listed with another agency earlier in the year who failed to finalise a transaction.

The sale price equates to more than $181,000 per licensed childcare place, one of the highest rates on record nationally and a clear reflection of investor confidence in premium-location childcare assets anchored by ASX-listed operators.

Bordered by Sydney Harbour and within easy reach to the CBD, Vaucluse commands some of Australia’s highest property values. Childcare operators in the area service families willing to pay premium fees for quality early education, creating a stable and high-performing tenant base that rarely vacates.

The elevated corner site sits at the junction of Billong Avenue and Old South Head Road, offering high visibility and convenient access for families across the eastern suburb’s corridor. The centre holds approval for 36 licensed childcare places and is operated by G8 Education, Australia’s largest ASX-listed early education provider with more than 450 centres nationally and a market capitalisation of $1.48 billion.

G8 Education holds a 10-year lease with options and annual rent reviews include ratchet provisions, meaning rent cannot reduce and guaranteeing rental growth over the life of the lease. The tenant is responsible for all outgoings, delivering a true net income of $215,000 per annum to the incoming investor.

Mr Vanstone said the sub-3.5 per cent yield reflects the unique convergence of factors at play: blue-chip covenant, irreplaceable location, scarcity of supply in the eastern suburbs with high barriers to entry for competitors, and the structural tailwinds supporting Australia’s childcare sector. With federal government subsidies increasing accessibility and workforce participation rising, demand for licensed childcare places in high-income areas continues to outstrip supply.

Mr Vanstone said the off-market nature of the sale saw a targeted approach to multiple buyer profiles of very well known Sydney childcare investors who were yet to see the opportunity which ultimately led to the vendor achieving a premium outcome.

 “Given our immense market share in the childcare investment sector across Australia and trust amongst many of the major childcare investors in the market, this targeted approach created competition amongst many likely investor groups.”