Despite a slow-down in the development of the nursery market last year, estate agents and valuers Christie & Co says it expects increased activity in the sector in 2006.

At the launch of the company’s Business Outlook 2005, Christie & Co director and head of Care Richard Lunn said: ‘ There is no doubt that the opening of so many subsidised day nurseries has hit the private sector which has struggled to compete for staff and children. The challenge for these businesses in the future will be to provide a more varied range of services, including overnight care, emergency care and even concierge services.’

Mr Lunn also cited the entrance of sale and leaseback vehicles to the sector as an indication that there is still the confidence in the sector that would allow operators to raise funds for expansion. Christie & Co advised the Nexus PINE LLP fund.

Christie & Co is also calling on landlords to ensure that rent reviews in the nursery sector are thoroughly researched, draw on relevant data, and reflect individual business potential.

It says that many landlords will choose to judge a property purely on its size without considering how the performance of the business is reflected. Comparisons are also made with non-nursery businesses as many towns have few full daycare settings that could act as a marker for rental prices.

Chartered surveyor and Christie & Co director, Nick Broadbent said: "There are many factors to consider besides just the property value. These include operational strengths and weaknesses such as occupancy levels, average fees, costs and the effective yield per registration. These are all factors that can differ very significantly between locations, and between one nursery and another. An excessive rent could be the difference between profit and loss."

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