New families and prospective parents requiring childcare are some of the big winners in last month’s budget, which means so too are the industry’s commercial property stakeholders. In the October budget, the government delivered another positive for the already robust sector by announcing a $4.7 billion investment in childcare over the next four years that effectively allows more families to access services.
More to go around
Under the packages, the maximum childcare subsidy rate will be raised to 90 per cent for those with their first child in care, a move that will lower fees for virtually every family in the country. It also allows parents with a combined household income of less than $530,000 to get more money back in subsidies – a saving of almost $1800 for a family with a combined income of around $120,000 per annum. (The subsidy currently stops for families at $356,756.)
Another $33.7 million will be dedicated to ensuring First Nations children gain access to a minimum 36 hours a fortnight of subsidised early education and care in a scheme which will start in July next year.
"From July next year, early-childhood education and care will be more affordable for more than 1.2 million eligible Australian families who will benefit from higher subsidies," Treasurer Jim Chalmers said in his Budget speech.
"Cheaper childcare is a game-changing investment in families, our workforce, and our economy.”
The NSW government also recently passed landmark childcare reforms that will pour almost $5 billion into the sector over 10 years. The NSW Childcare and Economic Opportunity Fund Act 2022, will help lower the cost of services for families in the state as well as remove barriers for those mothers who want to take on more paid work.
NSW’s childcare investment, delivered alongside the federal childcare reforms, is expected to allow up to 95,000 women to enter the workforce or take on more hours. As for the commercial property side of things, it will support private childcare operators in expanding existing and building new centres by boosting affordable childcare supply by up to 47,000 places.
The subsidies and subsequent flow-on effects for the childcare commercial property sector have been driven by the rise in double-income families and their need for early childcare and outside school hours care, industry analysts say. However, affordability has always been a major issue. According to official data more than more than 1.3 million children required government assistance to attend day-care last year.
Getting up to speed
Burgess Rawson childcare sector specialist Michael Vanstone praised the newly announced investment packages. “A very important reason why investors love childcare is effectively because the government underwrites the rental payments for the operators via the childcare subsidies,” Mr Vanstone said.
“This bipartisan support for the sector began about five years ago and now there is big and very welcome push from the federal government for us to get up to speed with other OECD countries in regard to the proportion of children participating in childcare.
“There are so many benefits with this extra funding including raising participation of women in the workforce. This is well underway – there’s about a 10 per cent differential between the number of men and women working whereas in 1980 it was 33 per cent.”
The Burgess Rawson agency currently has three centres available for sale priced below the $3 million mark which was a rare occurrence, Mr Vanstone said.
“These are all in the Port Macquarie region on the NSW mid-north coast,” he said. “It’s not often we get to offer such assets under $3 million. They all come with long leases and an award-winning operator [TG’s Childcare] which has achieved an ‘exceeding’ rating across multiple centres.”
The asset at 3 Riverbreeze Drive Crosslands, Wauchope was notable for its substantial 7392 sqm land size as well as a long history of 100% occupancy and waitlist.
The area’s population is forecast to rise 20% by 2031. “This area offers a really nice lifestyle for young families who don’t want to be in either a metropolitan area, a capital city or even the fast-moving parts of nearby Port Macquarie,” Mr Vanstone said. “Wauchope is a growth area where people see true value in the local area and it’s not in a flood zone.”
Sydney-based Head of Agency for Burgess Rawson, Sydney-based Head of Agency for Burgess Rawson, Yosh Mendis said in this economic climate childcare offered a particularly stable investment. “The big thing for us is that commercial property, including childcare, remains investors’ preferred investment because it offers a stable and secure income stream.”