1/11/2024 | Childcare & Education

Supply of suitable children’s social care properties is critically low despite rising need, says Christie & Co

Specialist business property adviser, Christie & Co, has today launched its Business Outlook 2024 report which reflects on the themes, activity and challenges of 2023 and forecasts what 2024 might bring across the industries in which Christie & Co operates in, including the children’s social care sector.

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Overview​

Christie & Co saw a heightened demand from Commissioners for children’s social care services and placements throughout 2023, resulting in an increased number of providers seeking suitable properties to increase their capacity and range of services.

Despite a pressurised economic climate, 2023 saw no let-up in buyer demand and market activity from a business property perspective. Though the high inflationary environment led to rising operational costs, increased expenses associated with the cost of capital, and a national workforce crisis, demand from buyers did not soften. Christie & Co continued to experience high levels of demand for properties suitable for use as children’s residential homes, alongside a heightened appetite from children’s services providers for properties with the potential for educational use. 

Such demand led to a 9 per cent increase in the number of children’s homes (from 2,642 to 2,880) and a 7 per cent increase in the number of places (to 10,818) from 31 March 2022 to 31 March 2023, according to Ofsted.

Despite rising demand for services and strong buyer appetite as a result, as we move through January 2024, the supply of operational children’s social care businesses available for sale remains low – a trend most apparent post-pandemic. Many owners with operational services have chosen to hold on to them and focus their efforts on increasing both the capacity and the breadth of services they provide in a bid to meet the increased needs of service users.


Pricing

In 2023, an overall combination of economic shifts, funding challenges, cost pressures, margin erosion and the increased cost of capital all contributed to a market reset in 2023, resulting in a 3.3 per cent decrease in pricing across childcare and education businesses, which follows some aggressive positive index movements in prior years.

Market Sentiment

 As part of its annual sentiment survey, the company surveyed childcare and education professionals across the country to gather their views on the year ahead. Encouragingly, 44 per cent of people said that they feel positive about the year ahead – an 11 per cent rise on survey figures reported in the previous year – while just 14 per cent feel negative. When asked about their sale and acquisition plans in 2024, 71 per cent said they are planning to buy and/or sell this year.

The Finance Landscape

In 2023, Christie Finance witnessed a 26 per cent rise in the number of childcare and education finance instructions, with a significant increase in leasehold operators seeking funding to purchase the freehold premises, ultimately increasing the value of the business that can be utilised as a springboard to aid future expansion.

Market Predictions

In 2024, Christie & Co expects:

  • Further expansion of provision with assets currently in alternative use seeking consent to be used as children’s homes and associated educational services
  • Increased consolidation activities, with owners of long-established businesses exiting their services due to market conditions and the upcoming general election
  • Further foster carer recruitment campaigns and potentially a shift back to foster care placements being Local Authorities’ preferred placement route as Local Authority purse strings tighter
  • Improved outcomes from better multi-agency collaboration in child protection

Courteney Donaldson, Managing Director - Childcare & Education, Christie & Co comments, “Throughout 2023, against a backdrop of with heightened demand from Commissioners for children’s social care placements and services, the post-pandemic surge of providers seeking suitable properties to increase their capacity and range of services continued unabated. We also saw an increase in multi-property portfolio disposals for corporate providers of assets, made available to market with vacant possession, in generally more semi-rural locations. During 2024, we predict we will see a steady increase in the number of regional operational businesses brought to the market as owners reignite their exit plans following a period of growth and consolidation.”

For the full Business Outlook 2024 report, visit: https://www.christie.com/news-resources/business-outlook/2024/


For further information on this press release, contact:
Phoebe Burrows, Corporate Communications Manager
P: 07540 063 598 or E: phoebe.burrows@christie.com