Australia’s 2025-26 federal Budget allocated a significant $5 billion to early childhood education. These Budget measures aim to expand accessibility, improve staff retention and support the development of new childcare centres.

While this investment has understandably caught the eye of investors seeking stable, long-term returns, the very same factors are creating a compelling case for childcare operators to own their own properties.

Current market

According to Ray White Commercial, the childcare facility sector has grown considerably over the last year. Childcare property investment volumes hit$1.001 billion in the 12 months to March 2025, marking a 30.3% increase year-on-year.

Additionally, cap rates have tightened to 5.0%, down from 5.3% last year. The cap rate is calculated by dividing the property’s net operating income by its purchase price. Strong cap rate compression, as highlighted by this recent market data, indicates rising asset values.  

Budget allocation

The Budget's initiatives, including the $426.6 million allocated to the ‘3 Day Guarantee’ and the $1 billion Building Early Education Fund, are set to fuel increased demand and development.

What does this mean for owner-occupiers?

Operators who own their centres are well-positioned to benefit on multiple fronts.

First, rising demand driven by expanded subsidies and population growth will help improve occupancy and revenue reliability. This can help push the value of childcare assets upward.

By owning your premises, you directly benefit from this appreciation, building equity in a tangible asset. This equity can then serve as a powerful tool for future expansion or securing more favourable financing terms.

Additionally, as an owner-occupier, you maintain control over one of your biggest operational costs: rent. By eliminating rental payments, you can improve your cash flow and reinvest those funds directly into your business.

Second, the Building Early Education Fund may provide funding assistance for operators developing new sites, particularly in high-demand or underserved locations. This presents an opportunity to grow your footprint with government backing.

Finally, owning the land and building can strengthen your financial position when applying for loans or refinancing your mortgage. Having property on your balance sheet may support your application for funding to reinvest in centre upgrades, staff development or future expansion.

If you're considering expanding or opening a childcare centre, securing the right financing is key. Our team of expert mortgage brokers can help you find tailored loan solutions. Contact Ligo Finance today.

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