The Government’s announcement of an increased childcare subsidy not only provides income certainty for families facing an increased cost of living but has Kiwis eyeing up a limited opportunity to invest in the sector.

PMG’s CEO, Scott McKenzie, says that Kiwi investors who have long cottoned on to the importance of geographic and sector diversification, are increasingly looking at alternatives beyond the commercial property staples of office, retail and industrial for ways to further mitigate risk. Early Childhood Education (ECE) centres are part of this alternative mix and McKenzie says the announcement has already had a positive impact on investor interest in their current Direct Childcare Fund investment offer.

“Right now, many Kiwis are looking for defensive investments that provide reliable, secure returns over time. Our recipe for this is through a nationwide portfolio of ECE centres that are located in quality suburbs with subdivision development in progress to drive demand, on long-term leases and with excellent independent operators.”

However, while these strong fundamentals underpin the appeal of this sector, opportunities for New Zealanders to invest directly are limited.

“Ours is one of the few funds available directly to retail investors – and by quirk of good timing for us we happen to have an investment offer live at this time,” says McKenzie.

Demand for ECE centres remains high. 70% of three- and four-year-olds are enrolled in early childhood education in New Zealand and 43% of centres are currently reporting a waitlist for two-year-olds*. McKenzie says the new subsidy announcement, which is open to nearly 50% of New Zealand families, will further strengthen the appeal of the sector as an investment.

“Early childhood education is an important part of life for Kiwi families. Centres become a focal point for communities as children begin their learning journey, so for us and our investors it’s a rewarding sector to be involved in.”

Notes

PMG’s Direct Childcare Fund was launched in 2017. Following the current investment offer the Fund will have 10 properties, nine unique ECE operators, a total portfolio value of $54 million, a 12.2 year weighted average lease term and a projected gross cash return of 5.56% from 30 November 2022. Overall fund performance since 2017 has been 7.87%

* Ministry of Education ECE census factsheet 2021

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