Investors re-engage in ECEC property as two Sydney centres sell for around $10 million each

Investor confidence in early childhood education and care (ECEC) real estate remains strong, with two Sydney centres transacting for close to $10 million each in March.

The sales, located in St Marys and Bexley,  reinforce the sector’s position as a stable, income-generating asset class, despite uneven conditions across broader commercial property markets.

While differing in structure and operator profile, both assets attracted strong buyer interest and achieved yields below 5.5 per cent. The transactions highlight where value is being placed in 2026: long leases, established operators, and metropolitan locations with sustained demand.

A five-month-old Montessori Academy centre in St Marys sold for $10.29 million on a 5.25 per cent net passing yield.

The 104-place service, located on a 2,198 sqm site at 42 Morris Street, operates under a 15-year lease to a major privately owned ECEC provider. The campaign generated more than 130 enquiries, reflecting continued appetite for high-quality, recently developed assets.

Key drivers of interest included:

• Operator strength: Montessori Academy’s scale and track record supported investor confidence in covenant stability.
• Catchment fundamentals: Ongoing infrastructure investment and population growth in St Marys underpin long-term demand.
• Asset profile: As a near-new build, the centre offers depreciation benefits and limited short-term capital expenditure.
• Lease security: A long initial lease, with options extending beyond 2040, provides income certainty.

The result demonstrates that modern centres with strong operators and favourable demographics continue to command premium pricing.

A 91-place Bluebird Early Education centre in Bexley sold for $9.85 million on a 4.72 per cent yield, among the sharper outcomes recorded in Sydney this year.

The property, located at 12–14 Preddys Road, was sold via a leaseback arrangement with Oxanda Education founder Adrian Fonseca. The lease extends to 2041, with options through to 2071.

Generating $465,000 in net annual income, the asset was secured within 24 hours of launching to market, underscoring sustained demand for well-leased metropolitan centres.

The transaction highlights several ongoing trends:

• leaseback structures continue to attract strong interest
• metropolitan infill locations remain tightly held
• income certainty remains a key driver in investor decision-making

What the transactions reveal about the ECEC property market

While limited in number, the two sales provide a clear indication of current market dynamics.

ECEC continues to attract investment as a defensive asset class, supported by population growth, workforce participation, and government policy settings.

High-quality centres, particularly in metropolitan markets, continue to achieve strong pricing despite broader market recalibration.

Long-term leases remain a critical factor, offering predictable income and reduced vacancy risk.

Investors are increasingly focused on catchment quality, including population growth, supply pipelines, and proximity to schools and transport.

Established operators with consistent performance and strong governance continue to attract premium valuations.

These transactions provide practical insights across the sector:

• operators may leverage investor demand to support expansion or pursue sale-and-leaseback strategies
• boards can use current benchmarks to inform asset and capital planning
• investors can view ECEC property as a stable component within diversified portfolios

The broader takeaway is clear. Despite mixed economic conditions, investor confidence in ECEC real estate remains strong, particularly for well-located assets supported by long leases and experienced operators.

Source: Real Estate Source, Investors swoop on $10m childcare centres