With the uncertain atmosphere in global markets sparked by the crisis in Ukraine. Income security and capital preservation remain at an absolute premium, causing investors to move from the unstable security of cash and super to higher-yielding direct property investments such as childcare.
Services provided by the Child Care Industry are widely regarded as crucial to families and communities. All political parties have supported the daycare business for many years because of its advantages for Australian workers’ involvement in labour. When COVID-19 ends, this market will serve a significant role in providing safe and high-quality childcare so that parents may return to their job, which ultimately benefits the Australian economy.
Property and stock are often considered to be the best-performing investments. When it comes to making investments, it’s essential to keep in mind that there are many factors to consider when deciding. Find out the real value of investing in childcare with a deposit of $930K using capital from equity, cash or super fund as leverage to fund a childcare centre development that can achieve over $252k net income p.a and a real estate asset valued at $2.4mil.
Our comprehensive investment model based on over 27 successful childcare centre development with vital risk mitigation, pre-committed tenants and 80 years of combined experience in childcare sector development proves these impressive returns are achievable. In light of today’s cultural shifts, childcare centres are a very lucrative business model. Here are some reasons why you should give it a go.
There are now more households with two incomes than ever before.
In keeping with current family patterns and population growth, the need for childcare is increasing.
By 2024, the Australian Bureau of Statistics predicts a 9.9% growth in the number of children under the age of three, making them the fastest-growing population segment.
In addition, due to a societal change in Australia, more women are returning to work than ever before. With over 1.3 million children receiving government aid to attend daycare facilities in 2021, the rising tendency of dual-income households has fueled the demand for early childcare and after-school care.
Subsidies from the government.
The federal government sees accessible childcare to strengthen the national economy by enabling more individuals to enter the workforce. They provide a variety of scholarships and incentives to encourage more families to utilize daycare.
The Child Care Subsidy (CCS) is a price reduction program for qualifying families who bring their children to daycare or after-school care. It covers up to 85% of the costs, calculated based on your income.
The federal government has proposed a new CCS reform for 2022 that would boost the subsidy for siblings in foster care while also removing the income restriction. These subsidies make childcare more accessible to low- and middle-income families.
There has been a noticeable increase in the number of youngsters enrolled in childcare.
The number of enrolments continues to rise as more families seek two incomes and the affordability of daycare via government subsidies.
Even though the Covid-19 lockdowns influenced enrollment rates in 2020, the data are steadily improving, with 44 per cent of Australian children aged 0 to 5 enrolling in childcare programs. According to the ABS, eighty-one per cent of children aged four attend pre-schools despite skewed data due to the epidemic.
According to a report, Early Childhood Educator employment is predicted to “enjoy the biggest relative increase in the industry, expanding by 22 per cent or hitting 9,000 jobs by 2023” due to the growth of excellent childcare.
To allow additional centres required to satisfy demand, top managers are expected to expand by 20%, and childcare sector employment would increase by more than 25,000 jobs.
Land plots with a lot of potential in strategic places
Childcare centres are located on large plots of land, which is a developing value. As a centre owner, you can purchase either the land and property, the childcare centre itself, or both.
Because most shopping centres are located in residential neighbourhoods, owning the land gives you more control over your asset. It permits you to rezone it from industrial to domestic at a later date for a profit.
Due to the increasing urban expansion, more childcare centres will be required to serve the growing number of families looking for cheap housing in planned neighbourhoods.
Long-term, dependable leases from landlords that have invested.
As a leasehold owner, you can rent out the childcare development facility to tenants. Because repeated relocations are costly and may negatively impact enrollment numbers, leasing agreements usually are ten years with an option for an additional year.
The benefits of long, secure lease periods are mutually beneficial for both the renter and the landlord. Tenants may securely establish a long-term, sustainable company, while landlords benefit from fewer ownership changes, resulting in more significant rental revenue with no vacant period for the property owner.
Also worth mentioning is the increasing importance placed by the primary clientele – parents – on quality in terms of cleanliness and education. This increases competitiveness and might influence the choice of childcare investment centre. Consequently, the property itself remains in excellent condition and is regularly maintained.
How to Develop a Child Care Center?
Before spending time and money in acquiring or developing a child care centre, we always urge our clients to produce a well-thought-out business plan.
Step-by-step instructions on discovering the suitable childcare development facility sites before spending money and effort in constructing a childcare centre, choosing a suitable childcare operator to take up a long lease of your site and development are helpful. The following factors must be considered when investing in the childcare sector, from purchasing property to designing and building the facility.
Geographical characteristics of the site – this will include land appropriateness for a childcare centre, such as land topography, plot design and size, and proximity to areas where families often go.
Legal factors – this will influence the prospects of obtaining town planning permission.
Economic factors – determining the commercial viability of a particular centre, which is mainly driven by market evaluations –will inform what local demography is and how well the present supply of licensed places supports the community. This will help future operators understand the operational risks and the financial viability of a new centre.
Conclusion
Many people overlook the childcare business as an investing opportunity. Care for children and their families, on the other hand, has become ingrained in our modern way of life. It’s a solid industry that’s expanding to meet the requirements of a rapidly expanding population.
Mollard Childcare developer is among the most promising passive income sources today, thanks to the increasing number of women returning to the workforce, more excellent government assistance, and the possible return on childcare investment.
