An increase in investments in kindergartens in Germany
Investments in kindergartens are gaining momentum as investors try to diversify
Although this market is still considered very “niche”, more and more investors are deciding to invest in kindergartens throughout Germany. According to a senior executive at JLL, this is a natural continuation after investing in real estate such as senior housing and student residences – a trend where investors choose smaller real estate niches.
According to him, municipalities will probably want to sell more kindergartens as long as there is no change in the use of the property.
One of the investors setting his eyes on the kindergarten market is the company Omega Immobilien based in the city of Cologne, Nord Rhine-Westphalia. The Rhineland, which includes the middle and lower Rhine regions, is one of the most densely populated areas in Germany with about 10 million inhabitants. Omega Immobilien focuses on ongoing projects with professional kindergartens as well as existing day care centers. The lease is for a long term of 20 to 30 years and is protected by government agencies.
Already there is a shortage of more than 70,000 day-care centers or kindergartens in Nord Rhine-Westphalia due to rising birth rates and rising demand for places. Municipalities are expected to seek more kindergartens as a result of the legal right to such a place, which makes the project interesting, according to Omega Immobilien.
However, kindergartens are usually sold for between 1 million and 3 million euros, which means they are below the threshold of € 5 million for many institutional investors. “For this reason, retirement homes can be more attractive as an investment because they are larger, and the kindergartens offer equally safe income because local authorities pay part of the rent and have long-term leases.”
Taken from REFIRE – Volume 11, Issue 175, December 20th, 2018