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📆 Fri, 19 SEPT 2025 | MLB | Showers, Windy 13°
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🖐️ Good morning
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​If you want a plant to grow, you can fuss over it every day; watering, weeding, shifting it toward the sun.

Or you can place it in the right soil and let nature do most of the work.

A seed planted in the right spot often thrives on its own.

Childcare development is no different.

You can pour in effort — capital, consultants, marketing — but if the market or site is wrong, it will be a struggle.

Put the same energy into picking the right market and selecting the right site, and demand does most of the heavy lifting.

So the questions for developers and operators become:

• Are you grinding against headwinds, or aligning with the tailwinds of demand?
• Are you working harder than you need to, or letting the right market do the heavy lifting
• Are you betting on effort, or positioning in the market that multiplies your effort?

This week’s CREW dives into the forces reshaping childcare real estate:

• a looming supply crunch
• NSW’s biggest planning shake-up in 50 years
• and why early education delivers a triple win for families, communities, and investors.

We spotlight collaboration as the new growth engine, track India’s surging influence on demand, and examine how developers and operators are navigating the delicate supply–demand balancing act.

Plus: Inspire ELJ’s Noble Park debut and the latest DAs and service approvals.

📉 Childcare Supply Crunch
🚧 NSW Planning Reforms
🧒 Early education is a win–win–win
​👥 The Power Of Collaboration
🇮🇳 India Rising Fast
🚀 Childcare Supply–Demand Balancing Act
🏗️ Inspire ELJ, Noble Park, VIC
📈 New DAs & Service Approvals

📉 Childcare Supply Crunch

What’s happening:
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Australia’s childcare sector is staring down a perfect storm.

The new subsidy regime (from Jan 2026) will unlock access for 126,000 children previously shut out.

But the pipeline of new centres is already sputtering.

By the numbers:

• 🏗️ $30k–$35k per place build cost (single-level), +10% YoY. Some projects hit $50k.
• 📝 75% approval rate for childcare DAs, yet only ~40% become operational within 4 years.
• 📉 Development pipeline set to fall 25%+ from 2026, plateauing at ~10,000 centres.
• 💸 Land + construction + workforce costs continue to squeeze feasibility.

Demand drivers:

• Population growth + steady birth rates.
• Female workforce participation back over 75%.
• 3 days subsidised care for families earning under $533k, with up to 95% coverage for multiple kids.
• $3.6B wage grant backing a 15% sector-wide pay rise.

Why it matters:

• 📈 Investors: Stock volumes tighten, cap rates compress (~5.5%). Sales volumes already running ahead of 2024.
• 🏢 Operators: Higher occupancy + stronger rent fundamentals with less new competition.
• 🔑 Developers: Rising build costs + approvals drag make tenant-led projects the only viable pathway.

Bottom line:

CBRE expects demand to outpace supply for years ahead, a dynamic that boosts valuations, strengthens operators, and limits speculative new builds.

🚧 NSW Planning Reforms: What It Means for Childcare

This week, Chris Minns and the NSW Government announced the most significant overhaul of the state’s planning framework in nearly 50 years, with the introduction of the NSW Planning System Reforms Bill 2025.

These long-overdue changes will simplify approvals, speed up housing and infrastructure delivery, and cut red tape.

So what does this mean for childcare development?

⚙️ The Reforms

Key elements of the Planning System Reforms Bill 2025 include:

• Faster, simpler approvals for smaller-scale developments.
• A new Targeted Assessment Pathway for projects already covered by strategic planning and consultation.
• Proportionate assessment — less paperwork for simpler projects.
• Standardised conditions to give developers more certainty.
• A single, state-wide Community Participation Plan.
• Expanded “complying development” provisions to remove duplication.

🏫 Why Childcare Could Benefit

• Faster approvals → Centres can be delivered alongside new housing, rather than years later.
• Lower costs → Less red tape means reduced holding costs and design churn.
• Certainty → Standardised conditions help architects and developers design once, build once.
• Alignment with housing growth → As greenfield corridors densify, childcare can be delivered in step with demand.

⚠️ Watchpoints

• Quality and safety must hold → Speed can’t come at the cost of NQF compliance.
• Infrastructure lag → Centres still need roads, utilities, and transport to function.
• Land economics → Approvals don’t solve high site costs in metro locations.
• Community resistance → Traffic and amenity objections remain a risk, even with a streamlined system.

🏗️ Planning vs Service Approval: Who Checks What

Two parallel approvals are needed for every centre — often confused:

Planning Approval (Council / State Planning)

• Councils decide if a centre can be built.
• May require a Needs Assessment showing local demand.
• Proximity to other centres, traffic, and community impact are considered.
• In NSW, the Child Care Planning Guideline mandates demand evidence in Development Applications.

Service Approval (Regulatory Authority / Dept of Education)

• Issued under the Education and Care Services National Law (all States/Territories).
• Compliance-only focus:
  • Provider approval in place.
  • Building meets National Regulations (space, design, safety).
  • Staff qualified, supervisors “fit and proper.”
  • Policies align with the National Quality Framework.
• ❌ The regulator does not consider demand, proximity, or “oversupply” when granting Service Approval.

🔑 Bottom Line

These planning reforms will likely make it quicker and cheaper to deliver childcare centres in NSW — a welcome shift as demand grows in new housing corridors.

But remember:

• Planning = councils may test demand and proximity.
• Service Approval = regulator tests only compliance.

Both are mandatory, and success depends on navigating them together.

🧒📈 Early education is a win–win–win

The big picture: Australia’s early education sector pairs durable demand with policy tailwinds, creating scope for investor returns and social impact.

The Oreana Early Education Fund sits squarely in this thesis.

🔎 Why it matters

• Structural demand: Child population projected to rise ~24% (2022–2042); workforce participation keeps lifting enrolments.
• Policy support: Federal boost to Child Care Subsidy (+$4.5B over 4 years), plus VIC $9B and NSW $5B commitments, supporting affordability and access.
• Essential-service resilience: Long leases, near-full utilisation, and regulated settings make the asset class less correlated to market cycles.

📊 By the numbers

• $21.8B sector revenue (2024), 6.2% CAGR (5-yr).
• Participation up 39% (0–5s in care: 33.9% → 47.2% since 2009).
• Childcare deserts: ~24% of regions (2023) still have 3+ children per place.
• Investable universe: ~$28B; A-REITs own ~7% (rest is private capital).
• Workforce gap: 20,000+ educators short; sector needs ~16% staff uplift (to sustain + unlock unmet demand).

💡 What’s driving returns

• Macro tailwinds: Population growth + dual-income households sustain enrolment demand.
• Funding stability: Subsidies underpin affordability, smoothing cycle risk.
• Scale advantages: Networked developers/operators drive lower overheads, stronger staffing, and better absorption across markets.

⚠️ Yes, but

• Execution risk: Site selection, planning, and workforce constraints can delay openings and cap utilisation. Partner selection and pipeline discipline are critical.

🏗️ Where Oreana fits

• Oreana Early Education Fund: A dedicated strategy aligned to the sector’s income + growth profile, targeting assets and partners positioned to benefit from policy support, scale efficiencies, and persistent supply gaps.
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• Tie-up with Aspire Early Education & Kindergarten: Oreana develops and owns centres, while Aspire operates them. The tie-up has scale: more than 50 centres in Oreana’s pipeline, with 15 under construction and a GRV uplift from $234M (2023) to $554M (2024).
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  ​Aspire is the operator across much of this pipeline. ​
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  The partnership has delivered rapid lease-up. e.g., Ramlegh (Clyde North) hit 85% occupancy in 3 months and expanded nationally, including Oreana’s first WA centre at Baldivis.
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  Oreana is also a strategic investor in Aspire, reinforcing its position across both the property and operating sides of the sector.
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• Investment structure: Oreana launched a $60M Early Education Fund to acquire and hold freehold assets developed by its property division, creating aligned exposure to both development margins and long-term income.
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  The Fund intends to invest in ECEC freehold assets designed, developed, and constructed by Oreana; it may also have flexibility to deploy capital into direct property, managed funds, REITs, syndicates, and companies all with early education asset exposures.
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• Strategic stake: Oreana is also a strategic investor in Aspire Early Education, its key operating partner.

🏦 How funds secure pipeline

Oreana’s vertically integrated model is one way to capture both development margin and long-term income.

By contrast, listed funds like Arena, Charter Hall, and Federation often rely on fund-through arrangements with developers and developer/operators to secure their pipeline.

These deals give the Funds predictable metrics; a fixed coupon during delivery and a pre-agreed yield on completion which is accretive at the Fund level.

⚙️ Fund-through mechanics

• How it works: REITs like Arena, Charter Hall, and Federation structure fund-throughs with a fixed coupon (varies geographically but currently circa ~6%) paid on all capital deployed.
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• On completion: The deal converts to a fixed yield on rent, again circa ~6%, depending on location.
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• Why it matters: In today’s market, that same centre acquired at 6% would likely trade on completion for a sharper yield (e.g. 5.5% or below), meaning the REIT banks the 50+ BP spread, securing income and value that's accretive, while sidestepping open-market bidding wars.
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• For developers:
  • Provides a guaranteed exit and steady coupon during delivery.
  • The Fund is effectively providing all the capital (earning the coupon), removing the developer’s burden of raising equity/debt and guaranteeing an exit.
  • The trade-off: developer forfeits upside from an open-market sale (e.g. 5.5% yield vs. 6% fixed) in exchange for certainty.
  • Fund-throughs typically allow reimbursement for land and de-risking costs already incurred — acquisition, planning, leasing, and pre-construction expenses — once the project is fund-ready.
  • Funds usually only commit once these risks are largely mitigated.
  • Developers benefit from capital velocity, but often remain on the hook for delivery and performance risk through warranties, builder guarantees, and liquidated damages.

Capital velocity is the speed at which capital can be deployed, recycled, and redeployed to generate returns.

In real estate (and especially development):

• It describes how quickly an investor or developer can turn invested capital back into cash, either through a sale, refinance, or return of equity, and then reuse it on the next project.
• Higher capital velocity means your money is working more times in a given period, compounding returns faster, even if individual project margins are smaller.
• Lower capital velocity means capital is tied up longer, reducing flexibility and slowing wealth creation.

👉 Example:

• If you put $5M into a childcare development that takes 5 years to deliver, lease, and sell, your capital has low velocity — it’s locked up until exit.
• If you can recycle that $5M across three projects in the same period (e.g., through fund through, forward funding, early sale, or refinancing), your capital velocity is much higher, the same dollar works harder.

🤝 Alignment Model

Stated preference: Some institutional investors and REITs signal they prefer partnering directly with developer/operators, rather than passive developers.
​Why: It aligns interests across the development and operating phases — the operator has a stake in design, location, and delivery, may not demand a full development margin, and the investor secures a long WALE lease with a committed tenant from day one.
​Outcome: This reduces leasing risk and ensures projects are tailored to operator needs, supporting long-term portfolio performance.
​Example: In past fund-through arrangements, well-regarded operators like Green Leaves have been tied into multi-site pipelines, demonstrating how alignment creates efficiency and certainty.

📌 The bottom line

Early education remains one of Australia’s clearest impact-with-returns plays: strong demand, bipartisan support, and a deep private-market opportunity set.

👥 The Power Of Collaboration

​Philip Ryan (ex-Trilogy Funds MD) says it best: no one person or business has all the answers.

Real growth comes when capability is pooled, trust is built, and collaboration is structured.

Why it matters: The same principle drives Optivest Alliance — a private network where developers, operators, and capital partners work together, not in silos.

• Shared expertise = faster projects. Members trade playbooks and insights to convert data into deals at speed.
• Trust + structure = bankable outcomes. A disciplined, tenant-first process reduces risk and gives investors confidence.
• Collective advantage = competitive edge. One member can spot a market gap, but only the network can line up tenants, approvals, and capital before competitors.

🔑 The takeaway: In a market where undersupplied childcare catchments won’t last forever, collaboration isn’t optional; it’s the edge.

That’s what Optivest Alliance was built for.

👉 Interested? Email Jeff Gardner: jeff.gardner@optivest.com.au

🇮🇳 India Rising — What It Means for Childcare Real Estate

🧭 The Big Picture

Australia’s Indian-born population has surged close to one million.

It's now our second-largest migrant group behind the UK, and ahead of China.

Together with Chinese migrants, they’ve reshaped growth corridors across Melbourne, Sydney, Brisbane, and Perth.

For childcare property, these cohorts are a double-edged sword: they turbo-charge 0–5 population growth, but their cultural preferences can distort demand projections if not carefully modelled.

👨‍👩‍👧 Why It Matters for Childcare

• Family-driven households: 82% of Indian households are families, vs 71% nationally. Similar patterns apply to Chinese households, with low single-person ratios.
• Concentrated settlement: Wyndham, Casey, Parramatta, Hume, Blacktown, Whittlesea, Stirling; all high-growth LGAs where Indian and Chinese migrants cluster.
• Education focus: School quality and university proximity are the top drivers for location choice.

⚠️ The Participation Trap

Here’s the nuance too often missed in childcare feasibility studies:

• Extended family care is strong. Both Indian and Chinese households often have grandparents or relatives living nearby. This reduces reliance on long day care, particularly for infants and toddlers.
• Property > childcare fees. Many households prioritise mortgage repayments or investment property deposits over paying for formal care.
• Stage-specific use. Demand is stronger at preschool age (3–5 yrs), where English immersion and school readiness are valued.

📊 Result: In suburbs with large Indian and Chinese populations, raw 0–5 population counts overstate true market demand. Demand models that don’t adjust participation rates risk inflating opportunity signals and misclassifying oversupply as undersupply.

🏗️ Implications for Developers

• Adjust assumptions: Calibrate participation rates downward in Indian/Chinese-heavy corridors. A “green” Demand/Supply Ratio may in reality be amber.
• School-proximate sites win: Centres near high-performing schools absorb faster than generic greenfield sites.
• Design for siblings: When centres do attract families, expect multiple siblings across cohorts — meaning steadier family retention once enrolled.

💰 Implications for Investors

• Occupancy absorption risk: Lease-up periods may be slower than the raw data suggests.
• Yield differentiation: Centres with value-add programs (STEM, bilingual, school-readiness) align with cultural expectations and can outperform.
• Portfolio balance: Diversify away from corridors where both Indian and Chinese communities dominate, unless modelling has been stress-tested.

📊 Bottom Line

Indian and Chinese migration is reshaping Australia’s suburbs and delivering surging 0–5 populations.

But more kids doesn’t automatically equal more childcare demand.

Operators, developers, and investors must recalibrate their models:

• Adjust for cultural care preferences.
• Focus on preschool years, not just infant care.
• Prioritise school-linked sites over generic growth-corridor land.

👉 Ignore this nuance, and you risk being the developer who builds a “perfect” centre in the wrong suburb, only to find half your target market relying on grandparents instead.

🚀 First Movers, Late Entrants, and the Childcare Supply–Demand Balancing Act

In growth corridors, the childcare story often follows a pattern:

• A first centre opens, fills quickly, and sets the tone.
• A wave of new centres follows—sometimes before the population base is ready.
• Suddenly, multiple operators are chasing fewer than 1,000 kids aged 0–4.

👉 The result: a contested market where site selection, not curriculum, often decides winners.

Why first mover advantage matters

It’s real but temporary. Being first gives you:

• Early capture + stickiness: Families don’t churn if quality + convenience hold.
• Pricing anchor: First movers set local fee expectations and keep yield if they deliver quality.
• Waitlist buffer: Early entrants book multiple age cohorts, cushioning shocks.
• Staffing edge: Hiring early in a thin market locks in talent before competition heats up.

Why it’s not a silver bullet

Advantage fades fast when supply surges.

• Oversupply: New centres arrive in clusters. Demand lags. Occupancy fragments.
• Micro-catchments: Commute-path convenience trumps brand. A competitor on the “right side of the road” can win quickly.
• Price segmentation: Later entrants siphon demand with value, premium, or specialty offers.
• Fee + wage pressure: Discounting and staffing costs rise when capacity overshoots demand.

The effective demand reality

Child population stats mislead. The real picture comes from FTE demand:

1. 0–4 population (current + projected).
2. Participation rate in LDC (50–65%, age-weighted).
3. Average days per child (2.7–3.2 days/week).
4. FTE demand = pop × participation × (days ÷ 5).
5. Licensed place absorption = FTE ÷ 80–85% occupancy.

Example: 950 kids × 55% × 3 days/week = ~313 FTE demand. At 85% occupancy, sustainable supply ≈ 368 places.

If 500+ places hit before growth catches up, oversupply is inevitable.

Site selection in contested markets

The decisive factor when supply > demand.

• Visibility + access: Arterial exposure, signage, easy in/out access.
• Commute-path convenience: Parents prefer inbound-side centres.
• Co-location: Schools, retail, community hubs = stickiness.
• Parking + flow: Smooth drop-off beats pedagogy in stressed households.
• Micro-catchments: The true battle is 5–7 minutes’ drive-time, not suburb-wide.

👉 In oversupplied markets, site quality often means 95% occupancy vs 65%.

📌 Myth vs. Reality

Myth: Curriculum drives enrolments.
​Reality: Site selection does.

Why:

• Parents can’t easily evaluate pedagogy.
• They do notice safe access + convenience.
• Drop-off stress repeats hundreds of times a year.
• Location decides the shortlist. Curriculum only matters once you’re in it.

✅ Takeaway: A good corner beats a good curriculum. Parents live the commute daily; they only see the curriculum occasionally.

First mover strategies

• Defend quality: Retain educators. Protect NQS ratings.
• Absorb dips: Stress test −5–10% occupancy and modest fee pressure for 12–24 months post new openings.
• Leverage waitlists: Watch age-cohort enrolments, not just headline occupancy.
• Stay embedded: Community trust + visibility blunt new entrants.

Late entrant strategies

• Position clearly: Value vs premium vs specialty.
• Prioritise micro-location: Commute-aligned, school-adjacent, or co-located.
• Plan long ramps: 24–36 months to 70–80% occupancy. Budget for incentives + marketing.
• Recruit smartly: Pay premiums if needed. Culture + leadership become key differentiators.

Market health indicators

Watch for:

• Enrolments + waitlists by age cohort.
• Fee discounting prevalence.
• Staff turnover + ability to fill ECT roles.
• Days booked per child (rising or falling).
• Delivery pace of new housing lots.

The 20-year lease lens

Leases run long. Site quality compounds.

• Occupancy: A-sites sustain 90%+ through cycles; B/C-sites often stuck at 60–70%.
• Fees: A-sites can hold 5–10% premium—millions over two decades.
• Exit value: Investors heavily discount weak sites. A-sites trade tighter.
• Shock buffer: Supply waves, staffing costs, downturns—A-sites recover faster.

👉 The strategic discipline for operators, investors, and developers: only commit to A-grade sites.

Over 20 years, the gap between A and B/C sites isn’t marginal; it’s massive.

🏗️ Inspire ELJ — Noble Park, VIC (Opening late 2025)

The gist: Inspire Early Learning Journey is set to open a new campus at 341–343 Princes Highway, Noble Park VIC 3174 after a $1.85M site buy in 2022, delivered by Bensons Property with Donmar Projects and Point Architects.

💰 Deal

• Address: 341–343 Princes Hwy, Noble Park VIC 3174
• Sale price: $1.85M
• Date/Settlement: 8 Mar 2022 → 6 Jul 2022
• Land size: 1,247 m²
• Vendor: George & Helen Olandezos
• Purchaser: First Noble Park Pty Ltd (SPV)

🏗️ Delivery team

• Developer/Client: Bensons Property
• Operator: Inspire Early Learning Journey (Opening 2025)
• Builder: Donmar Projects
• Architect: Point Architects

📑 Planning

• Authority: City of Greater Dandenong
• Service Approval: Not yet visible on the ACECQA register (as at 15 Sept 2025).

🗓️ Timeline

• Acquisition: Mar 2022
• Design & approvals: 2022–23
• Construction: 2023–25
• Status: Point Architects confirmed handover to Inspire ELJ last week.
• Opening: late 2025 (post Service Approval).

🏢 Behind the developer

Bensons Property, founded in 1994 by Melbourne businessman Elias Jreissati, is named as client on Donmar’s project slate for Inspire ELC – Noble Park.

The group, active across residential, mixed-use, and childcare, briefly entered voluntary administration in late 2024 before exiting in Feb 2025 and returning to director control.

📊 Market metrics

• Land cost (2022): ~AU$1,480/m² (based on $1.85M / 1,247m²).
• Median house price (Noble Park): ~AU$800,000–810,000 (mid-2025).
• Median unit price: ~AU$530,000–$560,000
• Median weekly rent (houses): ~AU$530

🧭 Why it matters

• A textbook tenant–developer–builder alignment in metro Melbourne.
• Illustrates the 2–3 year cycle from land acquisition → DA → completion.
• Handover is complete but Service Approval is still pending; the critical last step before doors open.

📈 New DAs, Possible New ELCs, Service Approvals

Less activity, but the pipeline keeps moving: 10 fresh Development Applications, 5 service approvals, and 4 new providers hit the register this week.

​Download the data​

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​CREW is published by Jeff Gardner​
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​See you next Friday @ 9am AEST