Business Outlook 2025 | Children’s Day Nurseries

2024 was a busy year for our consultants, valuers, and agents who brokered a plethora of nursery deals across the country, including the sale of Pippa Pop-ins Nursery Schools in London, Kingfisher Day Nurseries in Derbyshire, Muddy Boots Childcare Ltd in Devon, Tiptoes Nursery Group in East Yorkshire, and the largest independently owned nursery group of 24 settings, Children 1st Day Nurseries.

We continue to see buyers keen to acquire both leasehold and freehold opportunities, albeit there remains a lean towards leasehold sales. Where previously there was a notable concentration of buyers seeking settings in London and the South East, activity in 2024 stretched across all areas of the UK.

In summer 2024, having won the General Election, the Labour Government began implementing some of the pledges in its manifesto. For childcare, this meant creating 3,000 new nursery classes across England, with a pilot scheme initially launched for 300 state nurseries to be operational by September 2025. The Autumn Budget followed, which saw rises in Capital Gains Tax (CGT), National Insurance Contributions (NICs) and National Living Wage (NLW) which will, no doubt, impact day nursery owners across the country.

Regional and larger groups continue to be active, acquiring or consolidating in areas where they have an existing presence and creating healthy levels of competitive tension for the most sought-after opportunities across the UK.

There has been positive news on the cost of borrowing front, with inflation beginning to settle close to the Bank of England’s target of 2% and interest rates have been falling in line with this. The cost of borrowing has a direct effect on the affordability for buyers looking to consolidate and expand.

Movement in the average price of day nursery assets sold, year-on-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.

• 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