Why Childcare Is a Smart Investment: Exploring a Growing Asset Class in Australia

With many investors looking for stable, long-term opportunities that also make a positive impact, one area that is gaining attention but is still not widely understood, is childcare. In Australia, the early learning sector is growing fast, supported by strong demand and government backing.

Read on to learn why childcare is becoming a valuable asset class, why the sector is an attractive investment option, and how Jarra Childcare Trust is helping investors tap into this opportunity.

Investing in Childcare

There are several reasons why childcare is a solid investment option in Australia. A growing population means that more families are moving into suburbs and regional areas, creating a steady need for more quality childcare services. The Australian government helps families pay for childcare through subsidies like the Child Care Subsidy (CCS). With the guarantee of 3 days CCS to all families from January 2026, this support makes childcare more affordable for parents and helps centres maintain reliable income.

In addition to this, with more parents working, especially mothers, the need for childcare continues to grow. With the increasing cost of living, and grandparents retiring later, meaning they are not available as a care option, the shift is reflecting long-term changes in how families live and work. Together, these factors make childcare a stable and growing sector that is well-supported by policy and community needs.

When comparing childcare assets to other types of property investments, there are a few reasons why they stand out:

- Long-Term Leases: Childcare centres often have leases that last 10 to 15 years, often with the tenant paying all outgoings. This gives investors steady and predictable rental income.

- Specialised Buildings: Most centres are purpose-built for childcare, which means they’re less likely to be replaced or repurposed.

- Essential Services: Childcare is a vital part of every community and families rely on it, this means that demand tends to stay strong, with the sector resilient to economic downturns.

- Low Vacancy Risk: Because childcare is an essential service, centres are less likely to sit empty compared to other commercial properties.

- Social Impact Matters: Investors are looking for opportunities that align with environmental, social and governance goals. Childcare investments directly support education, gender equality and community wellbeing.

These features make childcare assets attractive and reliable, with lower risk and consistent, predictable returns. By investing in the childcare sector, investors can contribute towards measurable outcomes such as improved school readiness and increased employment, while still expecting stable financial returns.

The Australian childcare sector is undergoing significant change, making it even more attractive to investors. The industry is becoming more organised, with better-run centres, stronger business models, tighter regulations and higher expectations around quality. Governments are continuing to invest in early learning, not just to make it more affordable to families, but also to increase wages, making the sector more stable and future focused. These trends make childcare a smart choice for investors who want long-term growth and real world impact.

Jarra - Investing Differently

With extensive experience investing in childcare businesses and property, and a strong track record developing more than 30 childcare centres for local and ASX listed national tenants, Jarra is an Australian Fund Manager and childcare sector investment specialist. Jarra’s conviction in the childcare space is built on the sectors position as an essential service, decades of unwavering government support, and strong industry outlook.

Our current investment opportunity, Jarra Childcare Trust, is a rare invitation to invest in a national portfolio of childcare assets, combining the stability of direct real estate ownership with the growth potential of national operating businesses. Aside from the attractive industry fundamentals we have already discussed, key highlights of the investment opportunity include:

- Dual investment strategy, with at least 50% of capital to be invested in high-quality childcare real estate, and the remaining to be co-invested in operating childcare businesses.

- Strong target returns • 15% p.a. equity IRR* • 8% distribution yield* (from year two)

- Experienced management team: Having successfully rolled out a similar hybrid investment strategy over the last 6 years, Jarra has partnered with Early Learning Management, a leading national childcare operator with over 35 years’ experience, to expand our operational expertise, governance and track record of improving centre performance at scale.

- Five-year term with a clear exit pathway via IPO, trade sale or institutional portfolio sale

Our team knows the childcare sector inside and out. We choose assets carefully to make sure they deliver quality, financial value and community impact. Our goal is to give investors access to a stable, meaningful investment, while helping improve early learning across Australia.

Disclaimer: This article is prepared by Michael Cameron. It is for educational purposes only. While all reasonable care has been taken by the author in the preparation of this information, the author and InvestmentMarkets (Aust) Pty. Ltd. as publisher take no responsibility for any actions taken based on information contained herein or for any errors or omissions within it. Interested parties should seek independent professional advice prior to acting on any information presented. Please note past performance is not a reliable indicator of future performance.