The nursery investment market continues to attract significant interest, boosted by the Chancellor’s recent announcement on free childcare entitlements.
GCW’s investor team has noted a strong appetite in recent months for nursery assets which now have a key role to play in sustainable urban placemaking.
There is more demand than ever for quality childcare provision as more people balance the demands of work and parenting. In many parts of the country, finding a decent nursery place can be a real challenge. Lockdown may have been a very difficult time for the nursery sector, but the most sought-after providers are now enjoying significant growth.
The recent Budget announcement further buoyed the market. From 2024 working parents with children aged 1-4 years old will be entitled to 30-hours a week of free childcare. Competition for the places is set to intensify.
Demand for nurseries is robust and investors are drawn to these strong fundamentals. Competition is strong for the best sites, and we anticipate attractive rental growth. There are several new well funded operators entering the market, such as N Family and Kido, competing for sites with the well-established brands Busy Bees and Bright Horizons. Lease terms are also appealing. 15 to 25 year terms depending on demand are expected and index linked rent reviews make it a compelling sector for income investors.
GCW Senior Surveyor Ben Legard commented: “We have advised clients on a number of nursery purchases over the last 12 months and have many more under offer. We have developed a strong track record as the market leader in this sector and the increase in free childcare provision will fuel further demand.”