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Purpose built childcare centre provides stable investment opportunity

JLL marketing 21 Boundary Road, Blockhouse Bay​



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21 Boundary Rd 14-outline2 small-min.jpgA modern child care facility in Blockhouse Bay is for sale through JLL.

JLL agent Kevin Reardon is marketing 21 Boundary Road, a 900sqm freehold site with a 313sqm purpose built childcare centre on-site. 

Says Reardon, “The building is new, architecturally designed and was only built last year, with the childcare centre opening in November 2016. The centre is licensed for 50 children, and although the business itself is not for sale, what this property will provide its new owner is a stable, passive income.”

The tenanted investment has a net rental of $135,200pa return and there is a long lease in place. The building is over two levels with all modern fittings including electronic sliding doors, a kitchen upstairs and another kitchen area on the lower level. There is also a large play area outside and nine car parks.

The childcare centre operator is well established in the business, with other centres located around Auckland. Says Reardon, “The property is located on a former residential site, which was carefully selected by the owner of the business who saw the shortage of childcare facilities in the area and sought to meet demand. They purchased the property and set about establishing the site to be a new, well designed premise for their childcare centre.”

Due to the design of the facility, and location, it would be more than easy to convert the dwelling back into a purely residential residence should there be a desire to do so in the future.

The property sits on a Blockhouse Bay residential street and is in an area popular with young families. “Being near New Windsor, the centre acquires business from both areas,” says Reardon. 

Childcare centres remain a strong and reliable investment that continues to provide competitive returns. With the cost of living continuing to rise, more and more parents need to return to work to meet living costs, which results in an increase in demand for early childhood education (ECE). The ECE market is a well-known, established and watched market, which shows constant demand as the population and influx of people into Auckland and its surrounding suburbs grows, with the population forecast to grow by half a million within the next 10 years.

Public funding for the sector remains strong and has risen from $860 million in 2008 to $1.63 billion, this coupled with the fact that the proportion of children enrolled in ECE is now 96.6% as opposed to 93.6% in 2008. This shows that the industry itself is on a constant trend of steady, reliable growth with a nationally average of 152 ECE centres opening each year.

Says Reardon, “Childcare centres provide a great opportunity for smaller investors to get hold of a reasonably priced, long-term, passive investment. They are notoriously sought after and tightly held, which results in the centres that are put on the market being snatched up by an investor pool that is just waiting for the opportunity. This leaves few options for other investors wanting to enter the market other than buying brand new builds or developing their own.”

Blockhouse Bay and the greater Mount Roskill area has seen some great upgrades and developments including the Waterview Tunnel and shopping centres along Stoddard Road, which bode well for the increase of population and traffic in the suburbs. Blockhouse Bay and Mount Roskill house many families who work in the city or surrounding commercial hubs. This creates a strong opportunity for schools and childcare centres to be in the area so children can be dropped off and collected as close to home as possible. 

Recent population counts and forecasts show an expected 9% overall growth of population in the Blockhouse Bay area, of which, 3% are between the ages of 0 – 3 between now and 2028.  Says Reardon, “It is expected that in the southern Mount Roskill area including New Windsor and Glen Avon, overall growth of 8% will be achieved during this same period, which supports confidence in the growth and success of the childcare centre at 21 Boundary Road.”

The property will be offered as a tenanted investment and sold through an Expressions of Interest campaign closing Thursday, 14 September 2017 (if not sold prior).