Queenstown childcare 'gem' on long lease

The property, at 12 Onslow Rd, is between Queenstown and Arrowtown. Photo / Supplied

The sale of a near-new childcare centre in Queenstown is expected attract prospective buyers fromaround the country seeking a prime long-term investment property in a stable, growing industry.

The 2178sq m property, at 12 Onslow Rd, is in the main commercial precinct of Lake Hayes Estate, an established residential suburb, between Queenstown and Arrowtown.

The property has a 12-year lease to established childcare provider Gems Educational Childcare, which is locally owned by a husband and wife team.

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

Mark Simpson and Alastair Wood, of Colliers International Queenstown, are marketing the propertywhich will be auctioned at 11am on April 24, unless sold earlier.

Simpson the sale represents an exceptional passive investment opportunity in a tightly-held commercial market.

"It is located in an ideal position to serve a growing local residential catchment.

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

"There's a mono-pitch roof, extensive cedar cladding and clerestory windows; while the outdoor play area provides plentiful shade, well-landscaped greenery and adventure areas for children to explore.

"The freehold site offers great access and abundant car parking, making it easy for parents to drop off and collect their children. What's more, this property receives natural warmth and light, even in the middle of winter," says Simpson.

He says the Low Density Residential zoned property has a net lettable area of 366sq m with a flexible configuration. The tenant, Little Rockets Educare Ltd, trading as Gems Lake Hayes Estate, has extended a new 12-year lease from April 1, 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 rent 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.

Wood adds that 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 the sector, including the 20 hours free programme, has continued providing stability for the industry."

He adds that 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.

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