A Mt Wellington property that has been a centre for early childhood education and care for almost 20 years has been placed on the market for sale.
The property, at 73 Aranui Road, offers 212sq m of floorspace on 1012sq m of land and generates an annual net rental income of $93,600 plus GST. It is leased to a major operator until 2025, with options to extend to 2041.
Bayleys sales agents Tony Chaudhary, Janak Darji and Paul Dixon are marketing the property for sale by deadline private treaty, with offers being taken until 4pm on Thursday, March 8.
Mr Chaudhary says: “The childcare sector in Auckland is experiencing record growth, and properties occupied by childcare businesses are proving popular with investors. Public funding for the sector is reliable and secure, rising from $860 million in 2008 to almost $1 billion now.
“The amount of land available means there is potential to extend the centre and increase its intake.”
He adds: “This fee simple property enjoys fixed rental growth of two percent per year, while the underlying value of more than 1000sq m of Residential Mixed Housing zoned land in a central location translates into substantial value at end of the lease term.”
The property, which is zoned Residential Mixed Housing, has been home to childcare facilities since 1999, with Li’l Champs taking over the operation of the centre in August 2017, and changing its name from Little Feet Preschool to Li'l Champs Sylvia Park.
“The family-owned Li'l Champs childcare group started in Blockhouse Bay in 2012 and has since grown in numbers and popularity, due to its low child-to-teacher ratio and competitive rates.” Mr Chaudhary says.
“The group, which caters for children aged between zero and five years, now operates four childcares across Auckland and one in Tauranga. The Aranui Road centre is Li’l Champ’s latest venture and is licensed for 41 children.”
The property, which dates from the 1960s and has a capital valuation of $1.28 million, has two fenced-off outdoor play areas, a disabled access ramp and a large front yard that serves as an open car park. The timber decking on the northern side of the building is enclosed and is utilised as a sheltered activity area for the children.
Inside, the centre has open-plan play and teaching areas, two kitchens, central bathroom facilities for the children, an adult toilet, a laundry, a coat recess and an administrative office.
The centre operates 7.30am to 6pm, Monday to Friday and offers 20 hours ECE for all three- and four-year-olds. It is located in the heart of an established residential suburb, is close to two primary schools, and within walking distance of a wide range of amenities located at Sylvia Park mall.
It also offers easy access to the Southern Motorway, the South-Eastern Highway and Mount Wellington Highway, and is well served by public transport, including a train line into the city from Sylvia Park mall.
Li'l Champs’ website states that the group purposely keep numbers at its centres low - between 45 and 60 – to better cater to the needs of the children. Teaching strategies are also strongly influenced by the Montessori philosophy, “encouraging children to be independent and confident learners”.
Mr Chaudhary says early childhood education (ECE) is all the rage in commercial property, with investors looking to capitalise on the surge in demand for places at childcare centres. “The sector is viewed as more secure than other asset classes, because of not only the strength of the leases involved but also New Zealand’s high childcare participation rate,” Mr Chaudhary says.
“Since 2008, the proportion of children enrolled in early childhood education (ECE) has risen from 93.6 percent to 96.6 percent, while time spent in ECE has reached an average of 21.7 hours a week, up from 13.5 hours in 2000. Public funding for the sector is reliable and secure, rising from $860 million in 2008 to almost $1 billion now.”
The Government fully funds 20 hours of care a week for all children aged three, four and five. They have recently pledged to spend an extra $193 million over three years for ECE and increase funding for centres that employ 100 percent qualified and registered teachers. Its stated goal is to have 98 percent of children attending an early childhood service before starting school.
Population growth has been the key driver of demand for childcare places, Mr Chaudhary says.
“New Zealand's 4.8 million population is tipped to exceed 6 million by 2027. In Auckland alone, the population is expected to virtually double to more than 3 million in the next 25 years with the number of children aged four years and under expected to grow by approximately 14 percent.”