Healthcare remains a strong investment sector, underpinned by powerful demographic drivers such as an ageing population and rising life expectancy, with the over-80s population expected to more than double by 2050. According to the report, investor appetite is also reinforced by ESG considerations and inflation-linked, long-income lease structures.
Market Trends and Investment
The past 12 months to July 2025 saw a period of strategic realignment, shaped by macroeconomic and geopolitical factors. The market evolved with rising M&A activity, joint ventures, and greater use of management contracts. Overseas capital was a key driver, with major deals involving sector-specialist REITs like Welltower and Omega, including the acquisitions of Care UK and 45 Four Seasons care homes (the latter led by Christie & Co).
Looking forward, the firm predicts increased adoption of sale and manage-back models, which combine higher returns with operational exposure, alongside traditional lease-based and sale-and-leaseback structures.
Development and Planning Challenges
The care home development sector continues to face planning delays, with under-resourced local authorities and new environmental policies such as Nitrate Neutrality and Biodiversity Net Gain slowing progress. Fully consented sites remain scarce, despite rising demand driven by an ageing population set to surpass 16 million aged 65+ within a decade.
Developers are mitigating risks through joint ventures and focusing on larger schemes (70+ beds) to achieve economies of scale. ESG remains central to new builds, with high BREEAM ratings sought for energy efficiency.
Transactional Market Analysis
Deal activity has surged, with Christie & Co reporting completions at their highest level to date, and a pipeline 24% ahead of 2024. Key shifts include:
- A rise in smaller homes (<20 beds), which now make up 38% of instructions (up from 12% in early 2024).
- Homes with 20–59 beds remain the majority at 56%, though this is down from 73% last year.
- First-time buyers accounted for 17% of deals in H1 2025, compared with just 4% in 2023.
- Small and medium-sized groups (3–19 homes) were the most active buyers at 32%, followed by independents (1–2 homes) at 31%.
Homes sold with vacant possession increased to 21% in 2025, with 60% staying in care use, 24% converted to housing, and 16% repurposed.
Operator Sentiment
Christie & Co’s summer 2025 survey found:
- Occupancy levels are back to pre-pandemic highs, with Wales reporting the strongest performance.
- Local authority fee uplifts varied, with Wales seeing the highest rises.
- Private fee rates increased by 5–10% across most regions.
- 98% of providers believe at least a 5% funding increase is needed to sustain care, with more than half calling for 10% or more.
- 69% of operators have paused growth or investment plans due to NI changes.
Finance Landscape
Christie Finance reports strong demand for debt funding across both core (up to £5m) and corporate (£5m+) segments. While lenders are cautious, the falling Bank of England base rate is creating better margins. Financing is being used for acquisitions, expansions, and upgrades, with real estate services such as bridging and development finance in growing demand.
Outlook
Despite cost pressures and planning delays, Christie & Co’s Managing Director of Care, Richard Lunn, described the current period as a “Goldilocks moment” for senior care investors, with strong demographic demand and limited supply creating attractive conditions.
📖 Full report available here: Care Market Review 2025
