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Rising demand from overseas investors particularly from China who are keen to buy UK nurseries, has pushed the average price of childcare businesses up by 10.8 per cent in 2017.
Despite greater costs facing UK nursery businesses and a decreasing number of registered childminders and nurseries in 2017, business property advisor Christie & Co believes international investors, including the Chinese, are eyeing up the UK childcare market.
The Asian investors are attracted by an interest in bilingual early years education and the relatively low value of the British pound. Continued uncertainty around Brexit made its impact in 2017 but the UK welcomed a rise in foreign capital into the UK market.
Christie & Co’s Courteney Donaldson, the managing director – Childcare & Education, which has just published its Business Outlook 2018 report, said: “Demand for high-quality formal nursery and childcare remained strong throughout 2017, despite associated costs and a declining number of registered childminders."
“Due to an extremely buoyant market in the UK and beyond, we have been able to achieve premium, market setting prices. Opportunities for acquisition and growth across the UK, Europe and Asia are becoming increasingly attractive to international investors and trade parties, and as such, we have witnessed increased M&A activity where activity drawn into the UK is in large part due to currency gains against the pound.
Innovations and 'push to raise pre-school class ratios'
“Outbound investment grew significantly in 2017 and will continue to develop throughout 2018. Demographic trends and regulatory changes offered potential for opportunistic European, American and UK based providers in countries such as China, where demand is growing for premium early years bilingual education.
“As we enter 2018, we will see a push to raise pre-school class ratios, and innovation will continue to reshape the childcare sector as new trends, such as co-location, Forest Schools and vertically integrated classrooms, enter the UK childcare landscape.”
It is high quality, early years settings that are of interest to the Chinese who are looking for good opportunities and strong returns.
Recently more than 700 Chinese partners met with UK early years providers who went to China to share their expertise. The UK childcare experts returned last autumn from the Government’s first early years education trade mission to China and attracted Chinese delegates back to look at British nurseries.
The Department for International Trade (DTI) selected 14 representatives of UK nurseries, chains and training providers to fly to China to attend early years forums and networking events in Beijing, Shanghai and Shenzhen.
Paul Whitehouse, the director of Buttercups Nursery Group which owns eight settings around West London, was one of the one delegates who flew to China.
Speaking after the visit, he said: “The extent to which the EYFS [Early Years Foundation Stage] is known and welcomed by many already in China was a real surprise.
“The scale with which it was implemented was also a shock with some nurseries being 200 or 300-place settings."
With the largest education system in the world, China is predicted to have an industry worth £340 billion by 2020. China’s interest in UK nursery provision has resulted in it inviting UK companies to discuss expansion into this booming market.
Other UK delegates included Stephanie Molnar, director of the Elmscot Group in Cheshire and Mary O’Reilly, international professional team lead at Early Years in Northern Ireland.
The UK early years experts met with well-established as well as new nursery providers in China, and property developers who are planning trips to visit British nurseries. Representatives from a Chinese real estate firm are among those who paid a visit to the UK and popped into Buttercups Day Nursery in Ealing to see how early years provision is delivered.