Appetite for early education assets has seen a surge in transaction activity with Burgess Rawson brokering almost $200 million in sales over the first three quarters of 2023.

Burgess Rawson director, Michael Vanstone said listings across the country have grown by 22 per cent over the past nine months, compared to the same period of 2022.

Burgess Rawson Partner and Queensland Managing Director, Adam Thomas said Burgess Rawson has proven itself as the market leader negotiating 77 per cent of Australian childcare centre investments over the past 18 months.

“We also reached a milestone with more than $2.2 billion in early education transactions to date,” Mr Thomas said. 

Recent sales include Jungle Zoo ELC in Mandalay, QLD which sold for $5.65 million, Bower Education in Kingswood, SA which was snapped up for $5.85 million and the Guardian Childcare in Seven Hills, NSW which transacted for $7.575 million. 

Mr Vanstone said the expectation of ongoing rate rises combined with mixed messages provided by market commentators and the RBA had led to a confusing environment and a slowdown in sales over 2022.

“Despite the cash rate rises, lack of supply and increased demand for these defensive assets has reversed the trend and vendors see the opportunity to maximise on the positive market sentiment,” he said.

Mr Vanstone said after average yields had a moderate increase to 5.3 per cent in early 2023, and have remained at this level throughout 2023 with the last 30 number of sales averaging 5.27 per cent. 

According to the Burgess Rawson Early Education Industry Insights report, early education rents per place have risen by almost 15 per cent since early 2022, to now average $3,518 per place, per annum in line with increased government funding, rising land values and construction costs.  

The Burgess Rawson report shows that early education rents have grown 87 per cent over the past decade and by 27 per cent since 2020 alone. Rents in NSW have increased by 46 per cent since 2020, taking the cost to average $3,696 per place.

“Over the last decade, sale prices have climbed exponentially. In 2012 you could buy an early education centre for $1 million. However, today they trade on an average of almost $6 million,” the report found.

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