To start with, it is not affordable for many families. Securing workers with the requisite skills is almost impossible in the current jobs market.
And childcare employees are leaving in droves because of low pay and burnout, with a record 7300 job vacancies in September
amid calls for the government to immediately boost wages by 10 per cent.
Despite these issues, institutional investors are taking a keen interest. CBRE describes the childcare market as ‘‘dynamic and sought-after’’ after significant stimulation in the past five years in line with favourable dynamics, the lower interest rate environment and government subsidies.
Its figures show the sector will record $13.8 billion in revenue for 2021-22, up 17 per cent compared with 2017.
Investment in the sector is considered to be relatively secure compared with competing real estate classes. A report by Peak
Equities says childcare comes with high visibility and predictability for investors, largely due to government funding and the
availability of comprehensive data.
Australian Unity also considers the childcare sector a valuable investment opportunity amid volatile economic conditions
and a looming recession.
It has committed $75 million to the construction of new centres or redeveloping existing ones, says Ryan Banting, executive
general manager of social infrastructure.
The numbers stack up. Each week, more than 790,000 children from about 650,000 families use long day care. Coupled with strong government support, that provides investors certainty, according to Banting.
‘‘Given we’ve got strong macroeconomic tailwinds, childcare is where we really want to invest and where we think investors will
want to move during this more volatile investment market,’’ Banting says.
‘‘We look for opportunities where we might have a virtual monopoly by the fact that we are the only childcare centre in a
community, or the highest-quality centre in a large catchment area.’’
The key to making the investment work is to partner with organised, efficient and well-researched operators who undertake
detailed diligence on locations where there is strong demand. ‘‘We, of course, also do our own due diligence to confirm that business case,’’ he says.
While the sector faces challenges, the real estate assets have strong market value. ‘‘Generally, assets that are closer to CBDs and major population centres tend to be higher value as their capitalisation rates tend to be slightly tighter and the day rates
that they’re able to charge tend to be slightly higher,’’ he says.
Another way to consider profitability is to weigh up the likely occupancy rates. ‘‘Operators with 85 per cent occupancy
rates have efficient operations. But equally, they might charge a premium because of the services and facilities that they provide
at a higher quality,’’ Banting says.
He admits there could be tough times ahead due to increased construction and capital costs, but believes the trend could be
short-lived.
On the ground, however, the childcare sector faces systemic issues. It’s too expensive, for one. Research conducted by Victoria
University’s Mitchell Institute found that one in three families were spending more on childcare than on groceries to feed their
families, while 85 per cent of families were spending more on childcare than on their utility bills.
But positive steps are being taken. The Albanese government’s childcare pledge includes $4.5 billion to cut costs, which will
reduce out-of-pocket expenses for a typical family by 37 per cent from next July.
From 2025, the government wants to move to a universal 90 per cent subsidy for all families. The details will be worked
through by a Productivity Commission inquiry next year.
But the rates of pay for childcare workers are also widely accepted as far too low. The average salary is between $55,000 and
$65,000, according to job site Seek.
Gender equity advocate Sam Mostyn, who was recently appointed to head up the government’s women’s economic equality
taskforce, says the social infrastructure that got everyone through the pandemic has generally been undervalued, underpaid
work often tackled by women in frontline roles in the caring professions, including education and childcare.
‘‘When it comes to childcare, women have long been doing more of the heavy lifting. Culturally, we have assumed that
women do caring-related jobs while men have access to opportunities, security, respect,’’ Mostyn says.
Meanwhile, Australia’s childcare sector is limping along without enough staff to service existing demand.
Exit surveys cite low pay, burnout and a lack of professional recognition as key reasons for resignations.
The childcare industry has grave concerns over whether it can find the estimated 10,000 additional educators and childcare
workers needed by next year when more parents call their local centre to take advantage of the cheaper spots.
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