ECE property as an asset class

From 1 October, families across New Zealand will receive greater support with early childhood education (ECE) costs through the Government’s expanded FamilyBoost allowance. The policy change is the latest recognition of the vital role childcare plays in enabling workforce participation, supporting communities, and strengthening the economy.

For investors, it further highlights why childcare property is emerging as one of the most resilient sectors in the commercial property market. Anchored by population-driven demand, underwritten by government funding, and supported by long lease structures, childcare offers a defensive investment profile that combines stability with social impact.

Underpinned by growth and government support

New Zealand’s population growth is driving consistent demand for childcare. New communities are forming around residential development corridors, particularly in Auckland, Christchurch and other high-growth regions. With every new neighbourhood comes the need for essential infrastructure, and childcare centres are high on that list.

Despite this demand, the overall number of licensed centres has grown only modestly in recent years. The result is strong occupancy levels across existing centres and waiting lists that remain common. For investors, this creates a sector defined by reliable utilisation.

Few commercial property sectors benefit from the level of government involvement that childcare does. Annual investment through initiatives such as 20 Hours Free ECE and targeted equity support programmes ensures a stable revenue base for operators. This funding provides consistency across economic cycles and strengthens the ability of centres to meet rental obligations.

Importantly, this support has proven durable. Even during COVID-19, government funding continued, enabling many operators to sustain payments and maintain viability despite temporary closures. This history reinforces childcare’s credentials as a defensive asset class.

Long leases and trusted operators

Childcare properties are typically held on long leases, often spanning 10 to 18 years, with rights of renewal attached. Operators also commit significant capital into centre fit-outs, making them deeply invested in their locations. Vacancies are rare, and where changes occur, sites are generally acquired by another operator rather than left idle.

These characteristics reduce volatility for investors and position childcare property alongside industrial and healthcare as a core long-term sector.

More than financial outcomes

Investing in childcare property also delivers measurable social value. Centres enable parents to participate in the workforce, support children’s development, and strengthen community infrastructure.

They represent the kind of essential service that makes a lasting difference in people’s lives - while offering investors stable income potential.

PMG Direct Childcare Fund

PMG Direct Childcare Fund is New Zealand’s largest diversified childcare property investment fund available to retail investors. The Fund provides access to a portfolio of purpose-built, high-quality childcare centres across the country, delivering investors the benefits of diversification, long-term income potential, and exposure to one of New Zealand’s most resilient commercial property sectors.

The PMG team will be hosting a series of roadshow events across the country this October.

Join us to learn more about:

• The fundamentals and outlook across commercial property sectors, including childcare.
• Why childcare property is becoming recognised as a core, long-term allocation for defensive investors.

Disclaimer: The information in this blog is of a general nature and was current as at September 2025. It is not intended to be regulated financial advice for the purpose of the Financial Markets Conduct Act 2013 and does not take your individual circumstances and financial situation into account. As with any investment, commercial property carries risks, including the risk of loss of capital. Past performance is not a guarantee of future results. PMG does not provide financial advice about whether an investment in one of its funds is right for you. Please seek advice from a licensed financial advice provider before making any investment decisions.