There was talk of pockets of glut of child-care facilities in metropolises and regions – a consequence of the fact that demand has been caught up – and to a lesser extent, a small proportion of misplaced centers by overzealous developers.
However, we believe that this situation will be absorbed in the short and medium term, as the supply will slow down from mid-2019, in parallel with the increased demand created by the increasing participation of the labor force. It works nationwide.
Our opinion is supported by an annual growth of the Australian population of 1.6%, recorded in 2017 (the growth of India, for example, increased by only 1.1%). In addition, the number of immigrants arriving in the country does not seem to be slowing down, which currently represents more than 186,000 people a year.
Here are a number of reasons why the fundamentals of investments in child care have not changed.
1. Increase in Government Funding
Both sides of the federal Parliament support ongoing funding to make child care more affordable and accessible, and to help families by increasing the rate of activity. Additional Commonwealth financial support for three-year-olds is also expected to be introduced in 2019, which will increase the affordability of childcare services, making them even more accessible to parents across the country.
2. Grants for Early Childhood
Since the introduction of the new child care subsidy in July 2018, operators have confirmed the increase in the number of child care spaces, which has resulted in an increase in the child care rate. occupation.
3. Population Growth
Australia now has 25 million inhabitants, and that number is expected to grow to 35 million by 2056. The growing number of children will continue to fuel the need for child care spaces.
4. Meaningful alternative to residential investment
Not only do child care assets have returns well above those of residential investments, but they also often have a residential zoning that supports the underlying property value.
5. Internet resistant service
The operation of a child care center depends on a service provided in a brick and mortar property and is provided by staff with a personal touch. It can not be reproduced or replaced by an Internet activity or outsourced abroad, let alone manipulated by robots, for example.
6. Increase in participation in the labor market
The ABS figures show a historic record of 60.5% of women currently in the labor market. This increase in female participation provides a long-term opportunity for the day care sector as more parents opt for formal child care while looking for employment opportunities.
7. Best Shopping Opportunities
The low cost of funds that is expected to remain in place until 2019 means that buyers can benefit from a higher margin between borrowing rates and attractive net returns
8. Robust Rental Conditions
Child care assets typically have long-term leases with integrated annual rent increases, providing protection against inflation.
Early childhood centers remain a sustainable and reasonable investment choice, supported by strong fundamentals. This industry is not going to collapse because of the disruption of the Internet, is fully supported by the government and will continue to grow with the increase in the population and the participation of parents in the workforce.
Michael Vanstone is a commercial leasing and sales specialist who previously owned and operated a high-performance child care center. As Sales Manager at Burgess Rawson Sydney, he specializes in his passion: the early childhood sector
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