Childcare centre in Sydney's Dee Why sells for $6 million, reinforcing recent trend

Childcare centres are much sought-after by investors, with a purpose-built childcare centre in Sydney's Dee Why selling for $6 million to a private investor at auction this week through Colliers International.

The two-storey centre at 63 Lynwood Avenue is approved for 86 childcare places.

It was custom built in 2009 on a 1672 sqm block, said selling agents Brian McInally and Corey Beauchamp of Colliers International.

The property earns a net rental of $358,537 plus GST per annum, and the sale translates to a yield of 5.97%.  

“While we’re seeing yields compress in this asset class, childcare properties are still highly lucrative for investors when compared to other property classes,” said McInally.

The centre is privately run, with the parties agreeing to a 10-year lease with a 10-year option.

It was bought by a private investor, who has a portfolio of petrol stations and was looking to diversify. 

“Childcare is an appealing option for many investors,” said McInally. 

“Demand for childcare places will continue to grow. Our population growth, combined with the strong diversity push to encourage more mothers to return to work means that childcare places are hotly contested. This demand will fuel further growth in childcare property.”

Recently, another childcare centre in Melbourne's Camberwellwas snapped up by a China-based investor for $6.82 million on a tight yield of 5.05 percent. 

The buyer paid more than $400,000 over the reserve for the hotly contested property.

The sale follows a similar result late last year when a China-based investor paid $2.3 million on a 5.1 per cent yield for a childcare centre at Rowville.

Late last year, two childcare centres were sold at a Burgess Rawson portfolio auction in Melbourne for well above $3 million and yields of 5.6 percent.

The one in Hampton sold for $3.95 million and the other in Heatherton for $3.2 million.