Australia’s childcare industry is experiencing the fastest pace of centre sales in years. In just eight months, more than $662 million worth of assets have changed hands nationally, according to MSCI Real Capital Analytics.

This surge in transactions has prompted questions about whether the sector is in crisis or simply undergoing a period of adjustment.

What’s driving sales?

Several factors are contributing to this wave of sales. Staffing shortages continue to plague many centres, with larger centres struggling to meet required ratios. In September 2024, Jobs & Skills Australia found there was a shortfall of around 21,000 qualified early childhood and education and care professionals.

Operational pressures, including rising wages and compliance requirements, are stretching budgets.

Construction and development costs have also surged, making expansions or new builds increasingly expensive. In some regions, labour shortages are being exacerbated by large infrastructure projects, pushing costs higher and slowing new centre development. For some operators, these pressures make selling or leasing a centre a more attractive option than investing in costly expansions.

Recent childcare scandals have also shaken confidence in the sector, prompting some operators to cash out rather than navigate mounting compliance and reputational risks.

Investor interest remains strong

Despite these challenges, investor interest remains strong. Centres are still seen as high-yield, relatively stable assets, with rental yields averaging above 5% according to Real Commercial.

This strong demand can push prices upward and make it more expensive for owner-operators to buy. Additionally, there is a risk that investors focused on returns may prioritise profit over the quality of education and care.

Why owning your centre is better

With more centres up for sale and investors potentially pushing prices higher, you may find that now is a strategic time to buy your own centre.

Ownership comes with advantages that leasing doesn’t. Operators gain long-term control over facilities, staffing and compliance measures. This helps make sure any upgrades and safety initiatives can be implemented without restrictions from your landlord.

The predictability of your finances can improve, with rent fluctuations eliminated. Centres with modern infrastructure are more likely to attract and retain both children and staff, helping keep your cash flow consistent.

In a sector some say is in “crisis”, ownership offers stability, flexibility and the chance to grow a sustainable, high-performing business. With low interest rates and strong investor interest driving both risk and opportunity, you have the chance to secure your centre and make a real impact in childcare.

With childcare sales at record levels, now’s your chance to secure a centre and grow your business. Ligo Finance can help with tailored loans. Get in touch today.

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