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Why you should consider childcare spaces for commercial property investment

By Greg Bell

From office spaces to retail rental centres, knowing which type of commercial property to invest in can be difficult. Childcare spaces, for example, are often overlooked opportunities that can often offer a great return on investment. Let's consider why you should think of childcare centres as a viable commercial property investment.

Rising in popularity

According to Commercial Property Guide, "childcare centres are one of the fastest-growing asset classes with average sale prices rising from $2.077 million in 2011/12 to $4.171 million in 2019/20" in Australia.  As more and more people are leaving their homes and returning to the office, there is a higher demand for this kind of business than during the COVID-19 pandemic. This leaves the door open for commercial property owners to capitalise on this increased need for childcare centres.

In addition to the increasing demand, these particular types of investments are also relatively stable in most cases. This makes these kinds of properties more attractive to commercial real estate investors, and rightly so. Even through the pandemic, childcare centres were still active in some areas, meaning that the rent was still coming in. To some degree, the resiliency of child daycare centres came because there was government support for these essential early learning environments.

A growing industry

The Urban Developer reports that childcare is an $11.6-billion industry. And it's growing. Parents need more help with looking after their children as social distancing regulations are lifted and they return to the office. This, in turn, means that more childcare providers are in need of spaces to operate.

IBISWorld reports that the projected revenue for the child care services industry is "expected to increase at an annualised 2.1% over the five years through 2021-22, to $13.7 billion" globally. It also shows that an investment in this field as a commercial property owner will probably only grow in value.

Even though numbers declined during the initial onset of the COVID-19 pandemic, childcare centres made a great rebound in the years to follow. This was partly due to assistance given by the Australian government. Child care services were declared an essential service and received $2.6 billion in the COVID-19 Response Package.

This assistance helped ensure that there were steady revenue streams for real estate owners — even when other rental properties were not as fruitful. To learn more about commercial investment opportunities, reach out to Ray White Surfer's Paradise

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