According to key business lobby groups, the UK economy is prospering and economic recovery is now in full-swing. Growth is reaching record highs and the British Chambers of Commerce (BCC) has upgraded its growth forecast for 2014 from 2.8% to 3.1%.
Recently, however, most of the headlines have been focused on the apparent boom in residential property prices. With concern mounting that, in the housing sector at least, property values are raising so high and so quickly that the bubble will soon burst.
The business property sector has also started to see the beginnings of an increase in values, although nothing quite like the dramatic surges that we’ve seen in certain areas of the residential market, such as in London and the South-East.
With this in mind, the dental sector remains unique in its reduced response to external economic influences. It is one area where values, and banks’ approaches to lending, are less affected by changes in the general fiscal situation. But that’s not to say that values are not on the increase.
There are arguably very few markets that are more affected by the rise and fall of discretionary spending behaviours than the dental market. Prior to the recession and during it, the biggest determinant was patients’ attitudes toward spending. As we now emerge from the fog of the financial crisis we all wait with baited breath to see whether patients view investment in oral health as a key priority.
As LaingBuisson, recently reported in its UK Dentistry Market Review, there has been a significant decline in NHS primary care dentistry of around eight-and-a-half per cent.
And in private dentistry, the ‘golden’ period of growth in the 1990s (as LaingBuisson describes it) has been replaced by a deceleration as the market matured and patient demand suffered through the recent subdued economy.
However, none of this has served to undermine the appetite in the dental market from operators undertaking expansion plans and investors who view the sector as a ‘gift that keeps on giving’.
The private dental sector, particularly, is set to ‘bounce back’, from its recent period of contraction. What is more the activity in the transactional and investment environments certainly reflects a re-maturing marketplace, and ultra-competitive corporate activity continues to maintain its rapid pace.
In the meantime, the shape of the sector remains fascinating, with fewer than ten per cent of practices in corporate ownership – although multiple ownership is growing amongst ‘mysterious’ owners whose diverse branding makes it difficult to keep track on their movements. It is highly likely that the next few years will see a growing number of independent practices acquired by these small group operators, and smaller groups swallowed up by larger owner-operators.
Presently, values of dental practices are on the up – further confirmation of which is seen in the way that more banks are more forthcoming in offering finance for acquisition – on those, still relatively rare, occasions that dental practices do come to the market.
As with any property sector there are countless external factors and economic influences that will inevitably affect values and sales, but ultimately dentistry is one market where the consumer is king.
To discuss how Christie + Co might help you achieve your future plans please contact Simon Hughes on 020 7227 0749
BIO:
Simon Hughes joined Christie + Co in 1987 and has responsibility for the further expansion of its brokerage services into the primary care sectors of dentistry and GP surgeries. Over the past three years, Christie + Co has advised, valued or sold almost £1 billion worth of businesses. Simon heads up a dedicated team of specialist advisers and agents based in regional locations throughout the UK.
Christie + Co was proud to sponsor the LaingBuisson UK Dentistry Market Review.