Childcare centres top shopping lists of small investors
Private investor appetite for essential services real estate, especially childcare centres, medical properties, pharmacies and fast food outlets, lifted total sales across three days of commercial property auctions last week to $217 million.
Held in Sydney, Brisbane and Melbourne, 41 out 55 properties taken to auction through Burgess Rawson sold under the hammer, while a further six sold prior to auction, generating a combined clearance rate of 77 per cent.
At the final auction in Melbourne on Thursday, 19 out of 21 properties sold on the day for a combined $100 million and a clearance rate of 91 per cent.
Highlighted the strength of demand for childcare centres in particular, three facilities in suburban Melbourne sold for a combined $36.64 million, two of them on yields below 4.4 per cent at the auction held at Crown Casino.
A fourth childcare centre in Hallett Cove, a coastal suburb of Adelaide sold for $1.692 million on a yield of 3.99 per cent, a record low return for this asset class in the South Australian capital, according to Burgess Rawson.
“Childcare and fast food are at the forefront of investors minds,” said Adam Thomas, childcare specialist and partner at Burgess Rawson.
“We’ve sold over $400 million of childcare centres [through our portfolio auctions] this year, more than double what we sold last year, and there’s still the December auctions to come,” Mr Thomas said.
“Passive, private high net worth investors see the fundamentals in the childcare sector as strong,” he said.
In addition, he said, “various government announcements” including the bringing forward of an additional $1.7 billion of federal funding to make childcare more affordable and to encourage greater workforce participation, had increased the attractiveness of the asset class.
Alongside childcare centres, investors bought a Terry White chemist in Adelaide for $2.525 million on a yield of 4.75 per cent, a Country and Outback mental health clinic in Port Lincoln, South Australia, for $1.58 million on a yield of 4.78 per cent and two NAB branches in Swan Hill and Leongatha in regional Victoria on sub five per cent yields.
“Investors are seeking safe havens given we’ve just had a pandemic. They are focusing on those asset classes that stayed open and continued to trade during lockdowns,” Mr Thomas said.
At last week’s Brisbane auction, three Queensland childcare centres sold for a combined $12.68 million on yields of between 4.7 and 5.7 per cent while two Sydney childcare centres offered at the Sydney auction sold for $12.2 million on sub six per cent yields.
Across the three days of auctions, the tightest yield was struck for a First Choice Liquor store in Maroubra in Sydney’s eastern suburbs which sold for $10.17 million to a local investor on a 3.43 per cent yield.
A KFC restaurant in Berrinba in Logan City, south-east Queensland sold for $4.93 million on a 3.53 per cent yield while a Liquorland in Canberra sold for $2.51 million on a yield of 3.75 per cent.
The highest returning investments to sell across the three days of portfolio auctions including an office suite in Erina on the NSW Central Coast on a new four-year lease which sold for $1.35 million on a 7.78 per cent yield.
A Hardware Timber & Supplies store at Lakes Entrance in Eastern Victoria that also included two holiday rental properties sold for $3.98 million on a 7.6 per cent yield.
