Christie & Co have released its annual Childcare & Education: Mid-Year Review 2023 report

The report analyses the childcare markets in the first half of 2023, including UK day nurseries, international ECEC, specialist childcare and children’s social care, independent education, and SEND schools.

Christie & Co mid-year review key points from the report

From 2022 to 2023 year to date:

• 30% increase in number of children’s day nursery inspections
• 20% increase in new children’s day nursery instructions
• 131% increase in the capacity of day nurseries we’ve sold, with the average per setting being 83 places, compared with 63 places in 2022
• 106% of asking price achieved on children’s day nurseries, a 6.5% increase on the previous year.

Market activity

The report highlights that 2023 has remained busy, however the property advisors note that some of the larger operators and single site operators who are looking to buy, have taken a slight step back to review and take stock of the performance of their own portfolios to ensure their cost bases are under control.

The cost-of-living crisis has also had an impact on businesses. Particularly over the last year and in the first six months of 2023, operators have needed to significantly increase their fees, taking them to percentage levels Christie states they have not seen before.

Recruitment & retention

It will come as no surprise that recruitment continues to cause acquisition difficulties. The political parties have made pledges to tackle this but most initiatives will take time to come into place. Even more time with a general election looming.

The report states that high-quality staff are being driven out and, in some cases, poached, as the pool of suitably qualified recruits continues to shrink.

“While our data shows that 9.5% of qualified staff hold a formal teaching qualification, many operators are now focussing on their own training academies to ensure they have the necessary talent in their settings.

“So far this year, not much has changed in terms of what buyers are looking for; at the top of buyers’ wish lists are high performing individual settings and small clusters, and we have seen some of the larger groups become targets for private equity investors looking to gain further ground in the sector.”

Policy & funding

Early years education has become a much contested policy amongst the leading parties. In March 2023, the Chancellor, Jeremy Hunt announced funding for the sector in the Spring Budget.

According to the government’s official forecaster, the Office for Budget Responsibility, the new policy could boost employment by 60,000.

However, the sector has raised concerns that this is not nearly enough to stop significantly more providers closing.

In ‘Stop Underfunding – Start Building Futures England’, the National Day Nurseries Association (NDNA) reports that 79% of survey respondents continue to experience a shortfall in funding. The current funding rates fail to meet the costs providers incur in delivering 30 hours.

Scotland

Similar strains are being witnessed across other regions.

In Scotland, Audit Scotland’s review of the 1,140 hours expansion report found that, “despite £1 billion invested annually, the sector is fragile and funded providers continue to report risks to their sustainability.”

Mid-year review: International expansion

International activity has been “muted” in the first six months of 2023, but Christie & Co remained optimistic that the market will bounce back.

Larger international transactions include:

• Bright Horizons’ acquisition of 75 early childhood education and care (ECEC) centres in Australia
• Partou, the largest childcare provider in the Netherlands, acquired All About Children. This added 38 ECEC settings to their portfolio in the UK.