Childcare property market strengthens as investor demand grows

Australia’s childcare property sector continues to attract robust investor interest, with new figures showing a 6 per cent increase in turnover in the first half of 2025, underpinned by demographic demand, strong yields, and government support.

According to Burgess Rawson from CBRE, childcare investment sales reached $124.2 million in the first half of 2025, up from $117.4 million in the previous six months. This brings the total transaction value for the 2024–25 financial year to $241.6 million, highlighting the sector’s resilience amid broader economic uncertainty.

Yields have compressed by 90 to 130 basis points, with metropolitan properties now trading between 4.25 and 5.25 per cent and regional centres achieving 5.25 to 6.25 per cent, depending on lease length, location and tenant profile. This level of return continues to compare favourably against other commercial asset classes, particularly as childcare remains underpinned by long leases and reliable government funding.

Director of Burgess Rawson from CBRE Michael Vanstone said the demand for childcare properties is being driven by strong population fundamentals, particularly the growth in children under five now numbering more than 1.75 million and high female workforce participation, currently sitting above 63 per cent.

“Childcare is now widely regarded as an essential service,” Mr Vanstone noted. “It offers long-term income security and inflation-linked rental growth, making it a compelling option for both private and institutional investors.”

Recent transactions reflect this sentiment. In Queensland alone, multiple Goodstart Early Learning centres have traded at premium prices:

• Indooroopilly sold for $7.12 million at a 3.96 per cent yield
• Bray Park fetched $3.861 million at 3.81 per cent
• Wavell Heights achieved $4.12 million on a yield of 3.72 per cent

These centres are leased to established operators with strong reputations and long-term lease structures, including fixed annual increases of 3 to 4 per cent or CPI-indexed escalations. Many lease agreements also include substantial security deposits or bank guarantees, further reducing investor risk.

National tenants such as Goodstart Early Learning, Guardian, Affinity Education Group, and Only About Children remain highly sought-after, with their financial stability and operational scale reinforcing investor confidence.

Looking ahead, Burgess Rawson anticipates further growth in the third quarter of 2025 as vendors capitalise on favourable market conditions. Listings are expected to rise in response to demand from investors seeking resilient, socially significant assets.

Continued government investment is also supporting sector growth. The Three Day Guarantee Program, set to subsidise care for an estimated 100,000 families, is forecast to lift enrolments and occupancy rates. Meanwhile, the $1 billion Building Early Education Fund aims to expand capacity in growth corridors and underserved regions, fuelling new development opportunities.

With stable income profiles, long leases, and increasing demand for care, childcare properties remain a cornerstone of Australia’s social infrastructure and a reliable, high-performing investment class.

To learn more about Burgess Rawson and their portfolio visit their website.