‘Optimism remains high’ in UK childcare sectors, reports Christie & Co mid-year review
Specialist business property adviser, Christie & Co, has today launched its mid-year review of the childcare & education market so far in 2021, which explores property market trends across the children’s day nursery, independent education, specialist residential and specialist education markets, and considers some of the imminent changes that are likely to affect child centric businesses.
Children’s Day Nurseries
Christie & Co reports strong demand for children’s day nurseries across the country, yet the supply of high-quality nurseries coming to market is low which is increasing the prices that active buyers are willing to pay to secure the best assets.
Market appetite is increasing from a wide range of buyers across settings at all levels. During late Q2, larger group transactions evidenced ongoing demand and the interest in these businesses will fuel buyer appetite, investor interest and create further optimism for a busy and buoyant market as we move towards H2 2021. There is strong consolidation from regional providers looking to protect their current portfolios and seeking to gain market share, and larger providers divesting assets that are more suited to sole trader operations. There is also a heightened interest in rural, outer-city settings as buyers widen their search criteria to find the best deals and react to parents having the option to commute less regularly.
Nursery operators continue to battle with staffing and recruitment challenges, alongside managing occupancy changes which, in some cases, have been further compounded by a potentially sustained shift in parents’ working habits. Despite these challenges, optimism in the sector remains high.
In the months ahead, as ‘COVID babies’ start nursery and preschool children require additional support to enable school readiness, it is paramount that nursery businesses continue to receive the financial support they so desperately need to regain confidence and occupancy, and to deliver the vital services for families and for our country’s economic recovery.
The independent education market is witnessing continued demand from trade buyers and investors for established high-calibre, high-capacity independent, co-educational, day and boarding schools. There is also a partial shift in focus for private tuition businesses, and demand for smaller provincial independent schools on a vacant possession basis from a wide range of alternative occupiers.
Supply is hitting the market in the form of distressed assets across the UK language college sector, as well as the further closures of smaller provincial independent schools. The independent education sector is also likely to face imminent financial and staffing challenges because of the phased withdrawal from the Teachers’ Pension Scheme for schools, regardless of whether schools chose to withdraw or not.
The impact of Brexit continues to be a threat to the independent sector, as does the delayed return of international children to UK education as concerns arise around how long parents will be willing to continue to pay for online education before enrolling their children in local settings.
In 2020, there was a substantial increase in demand for regional specialist education and specialist childcare businesses and portfolios with mixed, complimentary services as the impact of the pandemic on the needs of children and young people became increasingly evident.
An uptick in referrals of specialist, often therapeutic, child support sadly continues, and this has further fuelled the demand of buyers who seek to keep up with the urgent requirement for accommodation and services. There has also been an increase in activity and demand for regional foster care businesses from buyers across the specialist education and residential children’s homes market, with a number of transaction announcements expected imminently.
Christie & Co concludes with a look ahead to the remainder of 2021, which is likely to include:
- Changes to the early years foundation stage (EYFS) framework
- Value realignment
- Business consolidation across sectors
- An increase in stock
- An increase in businesses in financial distress
- A fusion of online learning and in-person education
- The return of overseas students
- The announcement of the CMA report into children’s social care provision
Courteney Donaldson, managing director at Christie & Co, comments, “The day nursery, education and specialist childcare markets have rebounded incredibly well and, whilst operators continue to experience some operational challenges, this hasn’t hindered the appetite coming from buyers looking to acquire. Owners thinking about the sale of their business can be confident of pre-COVID demand.”
To read the full mid-year review, click here: https://www.christie.com/news-resources/publications/july-2021/childcare-education-mid-year-review/