Appetite for nursery deals remains high - market report

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Demand for high-quality settings from buyers is continuing to rise, according to Christie & Co’s overview of the childcare market in the first half of 2019.

courteney

Courteney Donaldson, managing director of childcare and education of Christie & Co, speaking at the Nursery World Business Summit 2018

The specialist business property adviser has published its half year review of the childcare and education markets, reflecting on previous predictions, emerging trends and challenges facing the sector.

Christie & Co said demand for high-quality, single-site settings and small groups has continued to outstrip supply, allowing the high prices of last year to continue.

The group said the buyer pool continues to be ‘incredibly strong’, including first time buyers, who made up almost half of its transactions in the last six months, consolidation from small and regional operators, nationwide growth from corporate operators and investors, and international interest.

The latter does not seem to have been impeded by Brexit, Christie & Co said, with appetite to invest from overseas growing this year, notably from China, the Far East and Europe.
The year so far has also seen increased interest among care home developers in co-locating with early years provision, according to the overview.

However, Christie & Co said it anticipates the values placed on businesses may reach a ceiling as buyers are less inclined to see prices rise.

While the group said no overt impacts of Brexit had been observed on the UK childcare market, it acknowledged there has been a slowing in the speed of some transactions this year, which it attributed to additional caution and due diligence taken by buyers as political uncertainty continues.

Christie & Co also reported several smaller settings had been put on the market this year due to financial difficulty as a result of the 30 hours offer.

Courteney Donaldson, managing director of childcare and education at Christie & Co, said, ‘While the volume of transactions across the UK childcare and education sectors so far this year has been marginally lower in comparison to the same prior year period, as we reported in January, 2018 saw unprecedented levels of both deals activity and pricing premiums, with numerous notable portfolios being  sold last year.

‘During the first six months of 2019, while deal volumes have stabilised, the premiums achieved for the most desirable businesses have continued to rise. Demand across the market for businesses of all sizes remains incredibly strong, and indeed the primary trend of 2019 thus far is that demand from buyers is exceeding supply.’

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