![Sample our Urban Studies journals, sign in here to start your FREE access for 14 days]({"type":"image" , "src" : "/sda/110826/TOC-Subject-Sample-2021-Urban-Studies.jpg"})
ABSTRACT
Childcare services are a key part of the social infrastructure of cities. Yet childcare property has recently been signaled as one of the fastest growing alternative real estate investment opportunities within a number of neoliberalized childcare markets. Shedding light on this phenomenon, in this paper I examine how urban childcare property has become an attractive option for individual investors in Aotearoa/New Zealand. Speaking to the literature on urban financialization and the neoliberalization of care, I examine the relationship between the privatization of childcare services and the growth of the childcare property market; the work of property agents as key intermediaries in shaping the terrain of investment into childcare property; and the passive investor subject which is envisioned. Ultimately, I argue that the role of the state has been crucial to the formation of this recent property investment trend in NZ, setting in place the conditions for assetization to occur.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1. A report by Colliers International (Citation2016) suggested that childcare property sales in Australia had increased by 800% between 2008 and 2016.
2. While this trend has only been documented in some Anglophone contexts, consideration of the prospectus of major global early education corporates, like G8 Education, suggests that interest in childcare property investment is mounting in other expanding childcare markets, like that of Singapore.
3. I use the term “post-welfare” here to signify the general individualization of responsibility for all aspects of care and social provisioning across the life course, especially pronounced within neoliberalized welfare economies. Within the context of this paper, I suggest that the withdrawal of the state from more traditional forms of welfare, through instigating new forms of conditionality around superannuation, for example (Clarke et al., Citation2012), alongside the rise of policy agendas like asset-based welfare, sets the conditions for increased household investment activity in the economy.
4. Lai (Citation2016) has presented a close examination of the role of Financial Advisors in both shaping the terrain for and the subjectivities of everyday investors through the creation of distinctive financial ecologies. Her work speaks to the need for a better understanding of these kinds of intermediaries and their work in shaping the particular geographies of financialization.
5. Similarly, Penn (Citation2011) in the UK acknowledges the practices of both the large scale investment of private equity companies into childcare and also the smaller scale activities of more individualized actors who largely operate on a sale and lease back model to release equity in order to remain solvent in the market.
6. For example in the UK expenditure on the care of the under 5’s has increased from less than £100 million in the early 1990 s to £3 billion on 3- and 4-year-olds by 2017–2018 (Belfield et al., Citation2018).
7. Sumsion (Citation2006) estimated the private sector in Australia to have grown by 400% between 1991 and 2001. The UK has currently about 85% of its childcare delivered by private providers. Corporate interest in childcare in these countries has also increased, with many chains now owned by institutional investors and shareholders, accessing childcare through the operations of global education corporates. In 2013 Busy Bees in the UK, at the time the largest childcare chain in the country, was purchased by the Ontario Teachers’ Pension Fund for £220 million, illustrating the profound work of international finance in (re)shaping both the spaces and practices of care at the everyday level.
8. Although as a commercial business childcare property can be sold by any property sales representative, there were a limited number of sales professionals across the country who openly advertise as having specialization in childcare sales and brokerage. These individuals were deemed to be the most appropriate participants for this aspect of the study.
9. Community-based providers (such as Kindergartens) largely operate on rental premises, but for historic reasons, they tend to be located on “Crown Land” and have rent waved or pay a nominal amount of $1.
10. New Zealand had and continues to have relatively poor child wellbeing outcomes amongst the OECD. This is particularly pronounced for Maori and Pacifica children (Unicef, Citation2017).
11. In NZ there has not been any accountability measures introduced alongside growing government funding, resulting in many questioning potential profiteering in the sector (Kett, Citation2017).
12. There are approximately five and a half thousand childcare and ECE services in NZ currently. This is made up of seven different types of service, many have only a few children (e.g. home-based care) but those with the largest licenses are childcare centers who can care for up to 150 children on one license.
13. See, for example, ARENA and Folkstone childcare REITs.
14. However, in the last five years, there has been an increased presence of group investment vehicles for childcare property in NZ, particularly in the domain of new build, fully tenanted services. These include the REIT Property Management Group Fund, Erskine and Owen Childcare Property Syndicate and the Provincial Pension Fund Group. A change in investor subject has also become evident in media coverage of childcare sales. For example, one recent article for a childcare sale in a national paper stated unashamedly “If you are a mum and dad investor this is not for you. It is aimed at a sophisticated investor”. https://www.stuff.co.nz/the-press/business/your-property/70518343/christchurch-company-launches-syndicate-sale-of–19m-childcare-portfolio
15. This was largely a political fiction as subsequent reports showed that of the 113,000 individuals who bought shares, 400 investors owned a third of those shares. (New Zealand Herald, Citation2013)
16. Notably, this period witnessed a significant opening of New Zealand’s economy under the guidance of finance minister Roger Douglas. Pertinent to the creation of an investor culture was the deregulation of the banking industry which gave the financial institutions significantly more freedom to lend.
17. The baby boomer period peaked in NZ in 1968. Statistics show that gross wealth of over 55 s had risen to 47% of total wealth in 2012 (Statistics NZ, Citation2018).
18. New builds tend to be larger and on newly developed sites close to growth areas in cities particularly. For this reason, they tend to be more expensive as an investment.
19. However, there is no state planning system, via a needs assessment, for example, managing the number of services being created.
20. In the ECE Financial Wellbeing Survey of owner/managers across NZ, 407 (out of a total 502) respondents were childcare centers. 70% of them were privately owned and the majority were in urban areas across NZ. Almost two thirds stated that their use of short-term finance had increased in the last two to three years to meet operating costs. While rent was not the only significant cost driver, approximately 40% stated they operated from rented premises suggesting that property occupancy conditions are an important, yet unacknowledged factor.