The UK has long been renowned for its education system and our schools, academies and universities carry both prestige and value, although determining the latter is not without its complications. The individual characteristics of educational property, and relatively limited number of transactions, reduces the sale evidence available and the uniformity of it. So how do you value a school?

Geography is important. In London, demand for schooling is high and there is an ongoing shortage of space which is reflected in the prices achieved for some of the capital’s prime schools compared with areas where the same demand doesn’t exist. Values for schools in towns and cities where space for new development is in strict supply, and there is potential for reconfiguration, can also reflect a wider appetite from residential and commercial developers.

The potential for change of use can be key. The D1 use planning class that applies for education also allows a building to be used as a health centre, day nursery, day centre, museum, public library, law court, training centre, place of worship or hall. Larger institutional premises, with enviable floor plates or attractive exteriors, can attract interest from business space developers, hotel groups, care home and care village developers, and wedding venue operators who will consider a change of use beyond D1, subject to planning. A sale that is underpinned by bidders considering change of use can be hugely distorted from a sale that’s not.

The reputation of a school is also important. Businesses with a sound track record, both in terms of trading performance and occupancy, are more likely to be able to re-invest in their property to improve the overall offer and can expect higher values at the point of sale. Any bad publicity around reputation can have damaging implications, especially when the pool of buyers in the education sector is relatively shallow.

These are but a few of the main indicators of the property value of a school. One size does not fit all and the sector, and its property, is sensitive to changes that happen over time, whether that be to reputation, policy or supply and demand. If we focus on the current education market, funding provided by the Education Funding Agency ensures demand for educational property is strong and values for buildings used for education are competitive with alternative uses. If this funding were to be withdrawn or restricted the existing educational values may fall.

Schools and their value drivers are ever-changing like the regulations and demands of the markets they operate in – here, perhaps more than in many cases, valuation is more an art than a science.

Further information

Contact Savills Leisure & Trade Related Property