Price of day nurseries rose by 7.7% in 2024 says Christie & Co
Specialist business property adviser, Christie & Co, has launched its Business Outlook 2025 report which reflects on the themes, activity and challenges of 2024 and forecasts what 2025 might bring across the sectors in which Christie & Co operates, including in the UK day nursery sector.
Market overview
2024 was an active year for children’s day nursery transactions across the UK, with Christie & Co brokering 59% of deals across the country, according to data on daynurseries.co.uk. The company also achieved a 36% increase in the number of offers received on day nurseries for sale.
Christie & Co saw an increase in appetite from medium groups – this buyer category acquired 5% of all day nursery transactions in 2023, which rose to 19 % in 2024. Conversely, compared with the prior year, 2024 saw a decrease in appetite from smaller groups, single settings and first-time buyers, with these buyers acquiring just 15% of assets in 2024 compared with 33% in 2023.
Buyers remained keen to acquire both leasehold and freehold opportunities, albeit there remains a lean towards leasehold sales, with 6% of day nurseries sold in 2024 being leasehold compared with 57% in 2023 and 59% in 2022. Where previously there was a notable concentration of buyers
With regards to the size of settings purchased, corporate and large groups acquired smaller settings last year, with the average having 86 places compared with 92 places in 2023. Smaller groups acquired larger settings, with the average changing from a 62-place nursery to a 67-place nursery, while there was little change in the settings acquired by independents and first-time buyers.
From an investment perspective, interest in the UK day nursery market in 2024 was fuelled not only by the extended early years entitlement and increased government-backed income in the sector, but also by a shift in investors focussing on social impact investment opportunities, ethical investing, and ESG considerations. The past 12 months saw a notable increase in medium-sized groups making selective acquisitions to expand their regional footprints. There was also no shortage in demand from investors and buyers seeking platform acquisitions and opportunities to consolidate via the acquisition of high-quality, larger capacity settings within the UK’s children’s day nursery sector.
Ahead of the Autumn Budget, October proved to be an unprecedented month for completions at Christie & Co, as owners progressed sales processes endeavouring to close deals, which many did, ahead of the announced policy and tax changes. This led to a surge in business owners deciding to sell.
Pricing
Christie & Co notes an average increase of 7.% in the price of day nurseries sold last year.
The quality of provision transacted in 2024 was notably stronger than 2023, with high volumes of investment-grade transactions completed. The average price of medium group portfolio sales increased by over 10%, while small group, single settings sales were flatter in pricing terms reflecting a tone in the order of 1% pricing increase. Whilst there may be some influence through the comparative premiums paid for portfolios, linked to the configuration, quality and nature of assets, alongside the type of buyer and their desires to acquire multiple nurseries in a single transaction, single asset settings remain in high demand and exceptional prices have continued to be achieved for those of high-quality in desirable locations.
Market sentiment
As part of its annual sentiment survey, the company surveyed childcare and education providers across the country to gather their views on the year ahead. When asked about their sentiment in 2025, 29% said they feel positive and 31% feel negative, while the majority (40%) remain neutral which illustrates the uncertainty in the sector. When asked about their sale and acquisition plans, 62% stated that they are looking to buy and/or sell this year.
Market predictions
In the day nursery market in 2025, Christie & Co expects:
- Continued interest in platform acquisitions, expansion and growth opportunities from entrants, established and new
- High demand for quality leasehold and freehold opportunities across the UK
- Further consolidation from large and medium-sized groups seeking acquisition opportunities
- Buyers will increasingly scrutinise parental demographics when considering acquisitions and undertaking due diligence
- With the 2025-26 EYPP funding rates not factoring in NIC increases, some settings will face greater financial sustainability challenges
Nick Brown, director & head of brokerage – Childcare & Education at Christie & Co, comments, “2024 was a super year in terms of positive activity on deals completed, from large groups to single assets and continued demand from a range of buyers right across the country. Whilst announcements in the Autumn Budget undoubtedly created challenges, the positive impact of the new funding announcement, the ease of inflation, the cost of borrowing, and the resilience of owners fuelled demand and competitive tension for opportunities – from existing operators looking to consolidate, new entrants and investors, all of which continues to drive the market forward. 2025 has already begun at a fast pace and we expect that appetite will continue to grow for high-quality settings.”
To read the full business outlook report, visit: https://www.christie.com/news-resources/business-outlook-2025/childcare/