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Inside the trends
Hannah Haines, head of healthcare consultancy at property advisor Christie & Co, provides insights into the key growth and development trends in the UK day nursery market

Demographic and policy trends are driving demand for day nurseries – this isn’t new – but to understand these in more detail, I have analysed Christie & Co’s transactional work (covering 2024 and Q1 2025) to determine buyer and seller behaviours, the change in ownership over time, supply of settings and places, and key development trends across the UK.
Demographic trends
The UK is experiencing changes in fertility rates and the rising age of first-time mothers, leading to fewer children and a declining population of those aged from newly born to four years. This trend is expected to continue.
In London, almost all children received their first-choice school due to a 2.1% reduction in primary school applications, which is likely to keep falling. However, changes in funded hours policies are increasing demand for childcare, especially in areas needing workforce productivity improvements.
Despite the falling birth rate, demand for day nursery places remains high, driven by increased workforce participation among women with young children. Additionally, many women aged 25 to 34 are migrating from London to nearby regions, which are commutable for work.

Changes in the availability of more funded hours mean there is an estimated need for 70,000 extra places and 35,000 staff to cope with demand. Research from the Local Government Association quoted that 90% of councils are concerned about nursery capacity ahead of the 30-hour childcare extension.
Since news of this extension was released in the 2023 Spring Budget (to begin September this year), 300 schools have been identified for expansion/ new nurseries at an average of 20 places per nursery. 42% of these are new nursery provision, and predominantly in highly populated areas.
Further to this, 90% of schools have said they intend to operate the nursery themselves, with one in ten presenting as opportunities for the private sector. If all 3,000 promised settings are delivered and at 20 places each, this makes 60,000 places, a shortfall of 10,000 relative to the estimated demand.
There are many ways this can be addressed, with new builds, the expansion of well-performing nurseries/those with waitlists, or the conversion of vacant properties.
How has ownership changed over time?
The UK has around 15,000 day nurseries and, while this figure has declined since 2020, the number of available places has increased as nurseries grow larger. In England, the market has seen consolidation, with corporate/national groups (20-plus nurseries) growing and individual/dual ownership nurseries declining.
Despite initial observations suggesting little movement in mid-size groups, there has been a ‘waterfall effect’ where all group sizes are growing and divesting. The market has expanded, with new builds and repurposed assets contributing to growth.
Our data shows that the total value of the day nursery market has increased by more than 50% since 2017, from approximately £7 billion to £10.5 billion. This growth highlights strong demand and investment potential, with investor-backed groups addressing national undersupply by reinvesting profits into further expansion.
Who is buying what?
So, what acquisitions are attractive to different groups?
By analysing our transactional activity, we can see that the average number of places in nurseries increases with the size of the group, and so may be linked to buying power. Nurseries acquired through Christie & Co in the past couple of years have been slightly larger than the average across each group, which can be linked to how attractive it is to operate with economies of scale and in buildings that support efficient staff-children ratios with age-specific rooms.
However, there is no real trend in the type of build that appeals to different buyer groups. In fact, there’s no real difference between the share of nurseries acquired which are purpose-built compared with those that are converted across the corporate/large group and independent owners. This will be influenced by the availability of supply, but a message which supports the utilisation of existing buildings.
Location, however, is a key factor. Our review of buyer activity highlights that 80% of non-corporate buyers will acquire within 50 miles of their residence, and 50% of these will acquire within 20 miles.
So, if build type isn’t a key driver for going concern transactions, what’s going on as the market continues to grow?
How location is influencing development behaviour
When looking at key markets for new nurseries, markets where there may be the best operational return for developing or acquiring new businesses, we consider the demand drivers for development to be linked to the following five categories:
• Residential markets with a high ratio of population aged from newly born to four years relative to the volume of nursery places.
• Towns or commuter locations with high railway station activity or footfall relative to local nurseries.
• Work hubs/business parks or locations with a high volume of offices relative to the number of nurseries within the immediate surrounding area.
• Hospitals without a nursery integrated or nearby. Additional consideration for private hospital groups to target for contracts.
• Universities without a nursery integrated or nearby.

The graph above shows the proposed nursery developments and what category they are.
As you can see, quite a significant share is either new or a redevelopment, with plans for conversion on 16%. Looking at this larger portion for new and redevelopment, only 22% are stand-alone nurseries. Most are within residential developments to meet increased demand, followed by mixed and commercial developments and then school expansions to include a nursery.
Planning activity and trends
Development plans show a concentration in London and other cities, with positive activity in areas needing new supply, such as the Southeast, East, and to some extent the Southwest of England.
Outside of residential schemes in London, stand-alone nurseries are being developed across the country, addressing local undersupply. An analysis of buyer demand data and the ratio of children-to-places indicates a positive relationship between development and addressing local market undersupply.
New site sizes vary, with some larger sites offering additional facilities like sensory rooms and music rooms, though most are standard nurseries. New-build development alone may not fully meet demand, but there are various ways to create an attractive portfolio for investors or future buyers, focusing on location, outcomes, and future buyer considerations.
Addressing the supply gap
When it comes to addressing this supply gap, there’s no ‘one-size- fits-all’ approach that will work but, with an undersupply of provision, it’s important to remember that utilising existing buildings and stock can keep your estate attractive and well-performing.
Here is what we find buyers and operators are looking for:
Outcomes – This is not unique to day nurseries, but a good management team and workforce are critical for performance and in making an estate/business attractive for potential buyers. This influences outcomes.
Location – A key driver for performance is location. Identify locations where there is a high demand for services, noting the relationship between migration and development, a higher population, or an undersupply of provision.
Build type – Successful nurseries are seldom due to the build type. Having a diverse portfolio, mixed with converted and purpose-built stock, will best address the undersupply of nursery stock in some areas.
Size of setting – Day nurseries come in all shapes and sizes. Buyers generally look to acquire settings of 60-plus places (roughly 4,000 square feet plus) – this is more of a guide than a hard and fast rule – because there is typically more pressure on those with smaller capacities in terms of profitability and economies of scale.
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