Business Outlook 2023 reports encouraging market activity in 2022

Market Activity

Christie & Co reports a positive level of market activity throughout 2022, with much of the year being a recovery period post COVID-19, particularly in Q2 and Q3, where some strong transactional activity is reported.

Continuing the trend from the previous year, all sectors apart from Restaurants maintained a positive average price index movement, and childcare in particular saw the strongest increase of 6 per cent. Dental, care, hotels and public house sectors have also seen some resilient price movements throughout 2022, evidenced in the average annual increase of 2 per cent across Christie & Co’s specialist markets.

Average sale prices across each sector in 2022 were as follows:

Dental: +2.2 per cent
Pharmacy: +0.7 per cent
Care: +2.7 per cent
Childcare: +6.3 per cent
Retail: +1.5 per cent
Pubs: +3.0 per cent
Restaurants: -0.4 per cent
Hotels: +2.8 per cent

Key Impacting Themes

Increasing operational costs have already resulted in some sectors increasing prices and partially offsetting these onto customers, with the childcare sector notably seeing fee increases of between 3-12 per cent over 2022. While some business sectors will navigate the challenges by cutting costs, it’s expected that some sectors will see higher rates of distress sales and closures in 2023.

Workforce issues continue to be a challenge across all sectors, particularly within the hospitality,  childcare and care markets, and it’s expected this will be a recurring theme in 2023.

The unsuccessful mini budget in September, alongside rising costs resulted in delays in activity across all sectors in Q4, with buyers growing more cautious in the new market conditions and the risks around maintaining trading levels. Despite some positives from Jeremy Hunt’s Autumn Budget such as the £13.6 billion business rate relief scheme, and a £2.3 billion increase in school funding for 2023 and 2024, there are still concerns due to the rise in National Living Wage, while many sectors are still waiting for specific funding issues to be addressed particularly in the care and dental sectors.

Market Sentiment and Distress Levels

Despite increasing inflation rates and a post COVID-19 economy, Christie & Co reports that rates of insolvency and business distress did not rise as much as expected, making up only 3 per cent of activity in 2022. As we move into 2023 with the continuing cost pressures, rising interest rates to balance inflation, and Government support measures due to decrease, it’s expected that there will be an  increase in business distress levels with more under performing assets coming to the market. Operators who have presence in the budget and luxury ends of the market are likely to fair best in this uncertain economy, and for those that don’t, experienced well-funded operators and private equity will be ready to step in and drive the deal activity for 2023.

Darren Bond, Global Managing Director at Christie & Co, comments, “2022 was a year of recovery following the Pandemic.  After two really challenging years, we saw strong transaction volumes in Q2 & Q3.  Cost pressures and workforce challenges are expected to weigh more heavily on business and our sectors in 2023 and as the buyer and seller price gap is narrowed, we expect to see a busy year of activity ahead, with more assets expected to come to the market.”

Click here to read the full report: christie.com/business-outlook-2023

For further information on this press release, contact:

Fiona Fieldhouse, Corporate Communications Director
P: 07738 182 406 E: fiona.fieldhouse@christie.com