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Passive investment in Papakura underscored by high demand for childcare services

Globally, childcare/education facilities are an emerging investment asset class and it’s one that is gaining traction in this country on the back of changing work and family dynamics, and sound returns.

A fully-leased purpose-built early childcare facility on the corner of Great South Road and Butterworth Avenue in Papakura was recently placed on the market for sale and is attracting strong early enquiry.

Marketed by Tony Chaudhary, Amy Weng and Janak Darji of Bayleys Manukau, the land and buildings at 336 Great South Road, Papakura will be sold by deadline private treaty closing 12pm, Thursday 1st July, unless sold prior.

The freehold corner 1,419sqm site supports a modern, multi-level and low-maintenance building with 511sqm floor area, along with 425sqm landscaped and functional outside space with an enclosed deck, secure perimeter fencing and sealed car parking for 17 vehicles on the eastern boundary.

The residential-style building has three separate play areas, sleeping rooms, children’s bathrooms and kitchen on the ground floor, with staff amenities and storage on the upper level.

The property was purpose-built for the national tenant Kids World Childcare Papakura Limited, trading as All About Children Childcare, and the facility is licensed for 85 children.

It returns $243,100 per annum plus GST and outgoings and the lease is structured for assured rental growth. The 15-year lease commenced in 2018 and has rights of renewal until 2053. The rent is reviewed annually to the Consumer Price Index.

Chaudhary said the property is located within an evolving residential catchment that is seeing greater intensification as Auckland’s population continues to grow.

“Papakura and its surrounds offers one of the largest population catchments in the Auckland region and, given the push for higher residential density, the need for accessible childcare services will be heightened,” he said.

“There is still a pipeline of developable greenfield land for housing and as Auckland’s traditional boundaries spread out, the Papakura area is in demand.

“The underlying land value of the subject property, which is zoned Residential Mixed Housing Suburban, can only escalate over time.”

Chaudhary said along with changing workforce trends which are driving the sector at a wider level, the tenant’s long lease and its proven operational model, makes this a desirable passive investment for a long-term hold.

“Out-of-home childcare is increasingly required these days with both parents often working and families becoming more fragmented geographically.

“The demand for a facility such as this will continue on the back of the rise of the double-income household” he said.

“Additionally, the childcare sector tends to be defined by longer leases and in this instance, most of the outgoings are the tenant’s responsibility which further enhances the appeal for a passive investor.”

All About Children Childcare operates in eight locations around New Zealand, with a presence in Auckland, Manawatu, and Wellington and has been in business for more than 10 years.

Click here for more information on the listing.

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