Bricks and mortar in vogue

The low-interest-rate environment has sent investors heading swiftly to the higher-yielding bricks-and-mortar sector with demand rising for assets ranging from petrol stations and convenience stores to bank chambers and childcare centres.

Most investors are looking to own the land and install an operator, which generates rental income as well as capital growth.

The US convenience store chain 7-Eleven has raised more than $200 million in the past year selling stores and service stations across Australia. According to the sales agents from Jones Lang LaSalle, these sales have been on yields of about 6 to 7 per cent, with the buyers a mix of private investors and self-managed super funds.

The same category of investors is lining up for childcare centres. Burgess Rawson director Dean Venturato said the levels of interest in childcare centres had sale returns rivalling bank-leased investments.

Mr Venturato has been involved recently in marketing several centres and said the centres were favoured by investors who see comfort and security in the business of child minding.

"It is not a function that can be undertaken by a computer or online or offshore, which is a phenomenon affecting many Australian businesses at the moment," he said.

Burgess Rawson consultant Sam Newton said "family" investors were attracted by the security of government-funded places in centres. Recent sales included childcare centres at Wallan, Sunbury, Doncaster East, Sydenham and Hillside.

The venues with reasonably long leases and established operators generally sell for between $2 million and $3 million, at yields of between 7 per cent and 9 per cent.

"The fear factor surrounding the collapse of the Eddy Groves ABC childcare empire seems to have dissipated, with buyers recognising the industry is now more sound and a necessary service for many families," Mr Newton said.

Mr Venturato said that with increasing financial pressures on families and often both parents working, the demand for childcare services was increasing. He said the government subsidies towards childcare services also was a positive factor underpinning the performance of centres.

"The buyers will be attracted to childcare centres as awareness increases and especially among SMSF buyers who have accounted for more than half of the acquisitions of late," he said.

"Bank-leased investments have traditionally been hotly contested, but now\ childcare centres are rivalling the bank investments."

sjohanson@fairfaxmedia.com.au