The report highlights continued strength in care home investment, with sustained interest from domestic and international buyers. In particular, US-based funds remain highly active, while new ownership structures are reshaping the sector. Christie & Co notes the growing adoption of RIDEA (Real Estate Investment Diversification and Empowerment Act) structures, which allow REITs to own both the property and operating business. Major transactions under this model have already taken place, including Welltower’s acquisitions of Care UK, Barchester, and HC-One.
Despite these structural shifts, care home yields have remained stable, typically ranging between 6 per cent and 10 per cent, underlining the sector’s appeal as a defensive, income-generating asset class. International investors are also increasing their exposure to the UK care market, reinforcing its position as a destination for global healthcare capital.
Development Market Lagging Behind Demand
Christie & Co’s report notes that new care home development continues to fall short of demand, primarily due to lengthy planning processes and limited viability in areas with lower private-pay potential. Over the past year, 77 new-build care homes opened across the UK, delivering 4,795 additional beds, with an average home size of 62 beds.
However, more beds were created through the extension of existing facilities, with 6,551 beds added across 156 care homes. While construction costs remain elevated in many regions, the second half of 2025 showed early signs of easing, offering cautious optimism for developers.
Improved Trading Conditions and Market Activity
In the going concern market, trading performance improved throughout 2025, supported by strong occupancy levels and a reduced reliance on agency staffing. The report reveals that distressed cases handled by Christie & Co fell by 22 per cent year-on-year, reflecting healthier trading conditions across the sector.
Transactional activity remained robust, spanning homes of all sizes—from small seven-bed facilities to large homes with more than 100 beds. At the same time, not-for-profit providers continued to rationalise their portfolios, while many private operators sought expansion opportunities, despite a 15 per cent reduction in the number of care homes coming to market.
Bank appetite for lending remains positive, and Christie & Co highlights the emergence of a strong first-time buyer market, adding further momentum to deal activity.
Price Movement and Market Sentiment
Occupancy levels across the sector are now above pre-pandemic levels, and staff costs have stabilised, helped by access to foreign sponsorship licences, which have reduced agency reliance. Contrary to some media narratives, Christie & Co reports that most providers are experiencing improved profitability.
Limited stock availability, combined with strong buyer demand, led to competitive bidding in 2025 and a 7.1 per cent increase in average care home sale prices achieved through Christie & Co.
As part of its annual sentiment survey, the firm found that while 38 per cent of care providers feel negative about the year ahead due to funding and operational pressures, 62 per cent feel either positive or neutral about the sector’s prospects in 2026. Meanwhile, 58 per cent of respondents said they expect to buy and/or sell assets this year, consistent with sentiment recorded in 2024.
Predictions for 2026
Looking ahead, Christie & Co expects:
- Continued momentum in care home transactions as the cost of debt eases
- Healthcare to remain a highly attractive asset class for UK and overseas investors
- Further growth in REIT portfolio acquisitions, using leasehold and management agreement models
- The emergence of new buyers providing exit routes for smaller operators
- Ongoing shortages in new-build supply, keeping occupancy levels strong
Commenting on the outlook, Richard Lunn, Managing Director – Care at Christie & Co, said:
“2025 was an exceptional year of activity for our Healthcare team, with nearly £1 billion worth of individually transacted care homes across hundreds of deals. As we move through the new year, appetite remains strong, and our forward pipeline of deals for 2026 is already set to be ahead of 2025, demonstrating the sector’s continued desire for growth.”
