Queenstown childcare investment on long-term lease

Long-term investment opportunity in a stable and growing industry

A near-new, architecturally designed childcare centre for sale in Queenstown is likely to appeal to buyers across New Zealand seeking a long-term property investment in a stable, growing industry.

The 2,178sq m property at 12 Onslow Road is well located in the main commercial precinct of Lake Hayes Estate – an established residential suburb in a strategic position between Queenstown and Arrowtown.

It is on a generous 12-year lease to established childcare provider Gems Educational Childcare, which is locally owned and operated by a successful husband and wife team.

The lease returns $168,000 plus GST in net annual rent, with fixed increases and market rental reviews throughout the lease.

Colliers International has been exclusively appointed to market the property for sale by auction at 11am on Wednesday 24 April, unless it is sold earlier.

Queenstown Director Mark Simpson says it is an exceptional passive investment opportunity in a tightly held commercial market.

“This prime Queenstown childcare property is located at the heart of Lake Hayes Estate, putting it in an ideal position to serve a growing local residential catchment.

“Purpose-built in 2012, the property comprises a contemporary building designed by Nott Architects of Christchurch and recently remodelled by Queenstown architects Pope Kunath.

“Prominent design features include a mono-pitch roof, extensive cedar cladding and clerestory windows, while a generous outdoor play area provides plentiful shade, well-landscaped greenery and adventure areas for children to explore.

“The building is well positioned on a freehold site with good access and abundant car parking, making it easy for parents to drop off and collect their children.

“The location also allows the property to receive natural warmth and light, even in the middle of winter.”

The Low Density Residential zoned property has a net lettable area of 366sq m with a flexible configuration.

Tenant Little Rockets Educare Limited, trading as Gems Lake Hayes Estate, has extended a new 12-year lease from 1 April 2019, with four rights of renewal of four years each.

The lease contains fixed rental reviews of 2 per cent every two years from April 2020, and market rental reviews every three years, with the next due in April 2021.

Gems has operated the centre since opening in 2012 and established a second centre in nearby Shotover Country in 2017.

Both centres were full within a year of opening and now have growing waiting lists, which reflects the choice of location and quality of service.

Managing Director Alastair Wood of Colliers Queenstown says the property’s excellent tenant covenant is underpinned by the overall strength of the wider sector.

“Demand for early childhood education is growing in New Zealand, especially in fast-growing areas like Queenstown, allowing new opportunities for commercial property investors.

“Childcare properties have proven to be strong and reliable investments with competitive returns and long leases, backed by increasing demand.

“Government funding for early childhood education, including the 20 hours free programme, has continued providing stability for the industry.

“Queenstown’s wider community supports 20 childcare centres, and demand is expected to increase as the population grows.”

The property for sale is located only 12km northeast of central Queenstown, making it highly accessible to the wider Wakatipu community.

Surrounding properties in the Lake Hayes Estate include single-family dwellings and some recently constructed two-level apartments to the north.

A small commercial precinct is located to the east on the corner of Onslow Road and Nerin Square, which includes a restaurant, bar and general store.

The closest larger scale recreation, education and large format retail amenities are located in Frankton and Remarkables Park, including secondary schooling and further shopping facilities.

A new primary school has been recently developed in nearby Shotover Country, where the tenants also operate another childcare centre.

Wood says demand for Queenstown commercial property has continued to remain strong over the past year.

“There is no shortage of investors looking to purchase quality commercial property with investment yields typically stronger than almost anywhere in the country.

“Unprecedented growth in tourism and related investment; infrastructure development; economic growth; and increased construction activity are holding the property market at a cyclical high.

“Demand exceeds supply in most sectors and some areas, including rental housing, remain at crisis point.

“Against this background, we expect very strong demand for the quality childcare property for sale at 12 Onslow Road.”

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