Two childcare centres in Melbourne’s south-east have sold off the plan to a Chinese investor for $10.5 million.
The centres sold on a yield of 6.3 per cent, slightly higher than average, reflecting a discount for purchasing two properties in one line, Savills ‘s Jesse Radisich said.
Mr Radisich marketed the assets with Julian Heatherich, Mark Stafford and Benson Zhou.
Development and turnover of childcare centres has risen sharply in over the past three years.
At the same time, average yields have crunched from a peak around 8.5 per cent in 2012 to 5.84 per cent this year, according to figures from agency Burgess Rawson.
Oreana Property Group developed the centres, one at 75 Station Street in Pakenham and the other at 84-90 Quarters Boulevard in Cranbourne West.
Both centres will be leased to new education provider Aspire Early Education on 10-year terms with two further five year options to renew.
Secure government funding, strong demand for childcare places, an increase in workforce participation and surging population growth are driving growth and small to medium investor interest in the sector.
A CBRE boardroom auction resulted in a Geelong childcare centre selling for $3.6 million on a 6 per cent yield. Agents Josh Twelftree, Sandro Peluso and Kinson Wong handled the sale.
The centre at 337-339 Charlemont Road in the new residential sub division of Armstrong Creek was leased to Eclipse Early Learning Group on a brand-new 10+10+10-year lease to 2047.
Another centre in Mornington has transacted for $1.365 million on a 4.2 per cent yield.
The centre sold at a well-contested Teska Carson auction for $165,000 above reserve, agents George Takis and Fergus Evans said.
The property at 18-20 Fleet Street was sold subject to a five year lease on a net annual rental of $58,000 with 4 per cent annual increases.
Mr Takis said the centre attracted interest from local, interstate and offshore buyers, with three bidders driving the auction.
“The property ticked all the boxes for astute investors in a red-hot market for childcare centres nationally and so the result was not a huge surprise,” he said.