Early education sector poised for further growth in 2025
The early education property sector is set to gain further momentum as long-term steady yields attract investors.
Investors in the early education property sector have seen their yields firming over the second half of 2024 from 5.69 per cent to 5.27 per cent, a Burgess Rawson analysis found.
Despite yields dropping by 42 basis points in the last six months, Burgess Rawson said the stability of the investment has attracted buyers, with the firm recording $240 million in sales in 2024.
Burgess Rawson’s childcare director, Michael Vanstone, said the sector has gained momentum as investors have shown an interest in stable 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 per cent,” Vanstone said.
Vanstone said investors in the early education sector have adopted a strategic land-banking approach.
“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,” he said.
Burgess Rawson’s key transactions were mostly in NSW and Queensland, with each state recording transactions between $3 million and $8 million, contributing to the sector’s strength.
NSW’s top sales include the Advanced Early Learning Centre in Merrylands, sold for $7.4 million at a yield of 4.33 per cent; the Woongarrah Early Learning Centre at $7.46 million; and the Affinity Education site in Budgewoi at $3.2 million with a 4.74 per cent yield.
Queensland Chatterbox Early Learning & Child Care Centre in Tillot Street, Dutton Park, sold for $5.38 million and recorded a 4.84 per cent yield, while the Edge Early Learning in Cannon Hill sold for $8.7 million.
Burgess Rawson partner, Adam Thomas, said yields have strengthened over the past two months, with several transactions below 5 per cent, reflecting the sector’s strength and investor confidence in these assets as stable, long-term investments.
Additionally, Thomas said that the market is set to continue its growth and investors who enter the space should only consider high-quality operators.
“Assets backed by nationally recognised operators are particularly sought after, as they offer long-term security and reliable income streams for investors,” Thomas said.
"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,” he concluded.