INDUSTRY ANALYSIS BY JOSHUA MARGESON
Assessment of Childcare Centre Rental Values Joshua Margeson, an experienced property valuer, discusses the most commonly used valuation methodologies for valuing childcare centre rentals and analyses the key drivers of growth in this area.
The Australian childcare centre industry has developed dramatically since 1992, when centres first became eligible for Federal Government means-tested child care subsidies. Since then, there have been significant increases in the development of larger, purpose-built centres providing modern fully serviced facilities, and the growth of smaller, owneroperated converted residential dwellings. Current trends have indicated that professionally operated centres with product ‘branding’ have become more dominant within the sector. This is evidenced by the market share of ABC Learning, which was the most eminent company involved in childcare centres throughout Australia prior to its collapse. Social changes such as the increasing number of single working parents and dual income families have fed the industry alongside the AVI ISSUE 2 2021 PAGE 15
commencement of Commonwealth funding. In terms of performance, the child care industry has had a history of significant falls followed by massive gains (largely produced by Government policy) over the last 10 to 15 years. The Main Types of Childcare Centre Assets In Australia, the child care industry consists of several distinct classes of child care services. Long day care centres (LDC Centres) usually cater for children under school age, in premises which are purpose-built or adapted for child care. LDC centres are most commonly operated by private operators, local councils, community organisations, employers and non-profit organisations. Since the Federal Government extended the availability of fee subsidies to families using ‘for-profit’ child care centres in 1990, the private LDC Centre market has grown substantially. Fees charged at LDC Centres are
not subject to Government regulation, and are influenced by a variety of factors including movements in award wages, service charging practices, changes to State regulations and increases in overheads such as rates, utilities and insurance. Government Regulation of Centres & Licensing The State and Territory Government regulates the operation of childcare centres via the issuing of licenses to the operators of centre within their jurisdiction. Local governments are responsible for planning controls such as development approvals. The childcare industry is heavily regulated due to the level of Government funding provided to the industry and the importance of maintaining standards. In July 2000, the Federal Government introduced the Child Care Benefit (CCB). The CCB replaced both the Childcare Assistance and the Childcare Cash Rebate
