For anyone looking to enter or expand in the childcare sector, the choice between developing a new centre (greenfield) and acquiring an existing one (acquisition) is one of the most consequential decisions in the process. Both paths can produce strong outcomes. Both carry distinct risk profiles, capital requirements, and timelines that need to be understood clearly before committing to either.

This article outlines the core differences in factual terms to help investors, developers, and operators structure their thinking.

The greenfield path

What greenfield development involves

A greenfield childcare development involves identifying and acquiring a suitable site, obtaining Development Approval (DA) from council, constructing or fitting out the building, obtaining ACECQA Service Approval and all applicable state licences, and then recruiting, building, and opening the service.

From initial site identification to first day of operation, a typical greenfield development takes 18–36 months. Sites with complex DA requirements or planning appeals can extend this significantly.

Site requirements

The Education and Care Services National Regulations prescribe minimum space standards: 3.25 sqm of unencumbered indoor play space and 7 sqm of unencumbered outdoor play space per child. A practical rule of thumb for site selection is approximately 10–15 sqm of total site area per licensed place.

For a 90-place centre — the commonly targeted scale for commercial viability — this typically means a site of around 1,000–2,000 sqm depending on building configuration. Multi-storey designs can achieve higher licence capacities from smaller footprints but at higher construction cost per square metre.

Construction costs

Current indicative construction costs for purpose-built childcare centres in Australia range from approximately $19,000–$34,000 per licensed place for modular construction, with significant variation by state:

  • Victoria: approximately $19,000–$28,000 per place
  • New South Wales: approximately $22,000–$31,000 per place
  • Western Australia: approximately $24,000–$34,000 per place

Traditional construction costs vary from approximately $2,000–$3,500 per square metre of gross floor area. A 90-place centre would typically represent a total construction cost of $2–4 million, with larger or premium fit-outs exceeding this range.

These figures are indicative only. Construction costs have been subject to significant inflation in recent years and vary by site complexity, local material and labour market conditions, and specification level. A quantity surveyor's estimate for a specific project is the only reliable basis for a capital budget.

DA and planning timeframes

The DA process is typically the longest and most uncertain element of a greenfield development. Preparation of DA documentation takes 2–4 months; council assessment, once lodged, can take up to 12 months or more for complex applications. Total planning timeframes from lodgement to approval are typically 6–12 months in most states.

Key assessment matters for childcare DAs include traffic impact, acoustic management (particularly outdoor play areas), zoning compliance, parking, and landscaping. Engaging a planning consultant with specific childcare DA experience at the outset reduces approval risk and timeline.

The ramp-up period

A new centre opening from zero enrolments typically takes 18–36 months to reach stabilised occupancy. This ramp-up period involves cash outflow before the service reaches its breakeven occupancy level — typically estimated in the range of 70–80% of licensed capacity. The financial model needs to budget explicitly for this period.

The acquisition path

What acquisition involves

Acquiring an existing childcare service involves purchasing either the business (the service operations, staff, enrolments, and goodwill, with or without the property) or the property and business together. The due diligence, legal, and regulatory steps are distinct from property acquisition and require specialist ECEC sector expertise.

The primary regulatory steps include: transfer of Provider Approval (if the purchaser does not already hold one), transfer or new application for Service Approval, and any state regulatory notifications or approvals required. Timelines vary by state but should be budgeted at 3–6 months.

Capital requirements

Acquisitions in the Australian childcare sector are typically priced as a multiple of EBITDA (earnings before interest, tax, depreciation, and amortisation). Multiples for stabilised, well-rated services have ranged from approximately 5x to 8x+ EBITDA in recent years, with the specific multiple reflecting size, location, quality rating, lease terms, and market conditions at the time of sale.

In 2023, total childcare centre transaction value across Australia was approximately $743 million, with childcare assets representing approximately 18% of premium investment sector sales activity. The sector has attracted significant institutional investor interest, which has supported pricing multiples at the upper end of the range for quality assets.

The advantages of acquisition

  • Existing revenue and occupancy: the business is operational, generating cash flow from day one (subject to post-acquisition retention risk)
  • Existing team: staff, including the Director or Nominated Supervisor, are typically in place (though turnover post-acquisition is a real risk that due diligence should assess)
  • Existing licence and approvals: regulatory approvals are already in place, avoiding the greenfield approval process
  • Known demand: a service with demonstrated occupancy history provides more certainty about demand than a greenfield site projection

The risks in acquisition

  • Inherited compliance issues: regulatory history, QIP status, and any outstanding improvement notices transfer with the service
  • Staff and culture risk: a business's real value is often in its people. Director or key educator turnover post-acquisition can significantly affect quality rating and occupancy
  • Deferred capital expenditure: existing buildings and equipment carry maintenance backlogs that may not be fully reflected in pre-sale financials
  • Inflated presented financials: adjustments for owner salaries, related-party rents, and occupancy run rates are routinely required in acquisition due diligence

Which path to choose

Neither path is inherently superior. The right choice depends on the investor's or operator's capital position, risk tolerance, timeline, and the specific opportunities available in their target market.

Greenfield development is typically more capital-intensive upfront and carries more timeline risk, but can produce a better-quality asset at a lower entry cost per place than buying a comparable stabilised service at a market multiple. It is the path for investors with patience and access to suitable sites.

Acquisition delivers faster operational stability and cash flow certainty, but at a valuation that reflects an established business. It is the path for operators who need operational momentum and are prepared to pay for it.

For either path, specialist advice — from planners, valuers, lawyers, and operators with ECEC-specific experience — is not optional. The sector's regulatory complexity and the specific financial characteristics of childcare businesses make general commercial advisory insufficient.