Investment in kindergartens

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Investment in kindergartens

Posted by Tanya Yujelevski on 01/05/2019
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Investment in Kindergartens | Sweet Home

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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. It has 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 government agencies protect it.

Investment in Kindergartens

Already there is a shortage of more than 70,000 day-care centers or kindergartens in Nord Rhine-Westphalia. This is due to rising birth rates and rising demand for places. Municipalities seek more kindergartens as a result of the legal right to such a place. This makes the project interesting, according to Omega Immobilien.

However, kindergartens are usually for between 1 million and 3 million euros. This 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. The reason is that 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

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