An ageing population means investors are increasingly interested in healthcare facilities, particularly care homes – but challenges remain.
After a few bumpy years for commercial real estate overall, healthcare assets are enjoying renewed interest. CBRE’s 2025 UK Healthcare Sentiment Survey, which canvassed more than 200 investors, developers and providers, found that investors broadly expect more activity and more allocations into the sector.
That isn’t just your typical property optimism. The same CBRE survey reports that respondents in the sample manage a combined £7.8 billion of healthcare investment and over 115,000 care home beds — which points to serious capital behind the words.
CBRE also recorded a big rise in investor appetite. A large majority expected to increase their allocations to healthcare in 2025, and many are more comfortable taking on leverage again because they see the income profile as stable.
JLL’s pan-European data, meanwhile, adds context: care homes and clinics have been among the most active parts of healthcare investment across Europe, with care home transactions particularly strong in recent quarters. The research notes that “care home investment increased 58% year-on-year,” highlighting how this subsector is drawing the most buyer interest.
Stable demand
Investors are attracted to healthcare for simple reasons. Properties such as care homes, GP surgeries and clinics tend to have steady cash flow because they’re paid by a combination of local authorities, private fees and, for primary care, long leases backed by the NHS or established operators. In other words, tenants are often organisations or businesses that keep paying even when the wider economy wobbles.
Savills has been bullish on certain slices of the healthcare market, particularly primary care. Its research notes that the “outlook for UK primary care real estate is strong”. That matters because primary care — GP surgeries, community clinics, and diagnostics hubs — is where most patient contact happens and where long-term demand is anchored by the NHS. Savills’ view helps explain why money is not just chasing large care-home portfolios but also modern, well-located clinics and GP buildings.
However, it isn’t all good news. Even with investor appetite and clear demand, the UK is not producing care home beds or clinic space at the scale needed. Reports in the press and in market notes highlight how new supply has been sluggish.
The Financial Times reported that only 86 net extra care-home beds were created in the UK in 2024, strikingly small compared to demographic need, and that completions fell sharply as costs and labour issues hit developers. That gap between demand and supply is the grounding reason investors see value, but it’s also the reason regulators and campaigners worry about the long-term health of social care.
“The big issue in the sector at the moment is we’re not really building enough care home beds to fulfil the demand that we see coming down the track with the baby boomer generation ageing,” says Rob Kinsman, Regional Director, Care, at Christie & Co.
“Conservative estimates suggest we need another 250,000 beds by 2050 to cater for the growing elder population and we’re not building enough. And, of course, a lot of homes are closing as well.”
He adds: “What we’re seeing is an increase in the number of closed care homes we’re selling. So, in the first half of this year, 21% of our total transaction numbers were for closed care homes and that’s actually up to 61% on last year.”
However, that doesn’t mean that those former care homes are leaving healthcare. “Those owners need a solution to realise the value in the asset,” says Kinsman. “Interestingly, most of those sales go back into the healthcare sector in some way, shape or form. Quite often, they’ll be selling a closed elderly care home and we sell it back into the specialist market for learning disability use or supported living use.”
On the ground, building a modern care home or a community healthcare hub is complicated. You need land in the right place, development funding, planning permission, operator agreements and a trained workforce to run the services once buildings open. Any one of those stages can stall or slow a project. And because operators are themselves squeezed by wage bills and regulation, they sometimes struggle to sign the long-term leases that investors want.
For Kinsman, planning is one of the most important barriers to development. “The issue with the new build is that the planning system is really, really slow,” he says. “It’s akin to the housing market in many respects. We all know there’s a shortage, but how we actually address that in terms of meaningful policy that’s implementable is a different matter. Also, we’ve seen build costs go through the roof since the pandemic.”
Operator pressures
A recurring, uncomfortable theme is that running care is getting more expensive. The CBRE survey highlighted staff cost pressures across operational real estate sectors, especially after rises in employer National Insurance contributions and higher national living wages. Those are direct hits to operators’ margins. Put simply, a new building is only useful if the operator can make a sustainable business out of it once it opens.
Because fee levels from local authorities and private payers don’t always rise in line with costs, operators sometimes need higher fees, subsidies or efficiencies to keep running. That creates negotiation points with investors: will an investor take a slightly lower rent to keep an operator afloat? Will operators accept different lease structures? These are live commercial questions across many transactions.
“Social care providers are facing challenges, with local authority fees not going up as much as utility bills, the national living wage increasing, etc.” says Kinsman. “We’ve seen margins being squeezed. What we’ve seen in the last two years is that local authorities are clearly cash-strapped and they’re not putting fees up in line with other costs.”
Opportunities
There are some clear opportunity lines that run through the research.
First, care homes and senior living remain the headline story. Demographics make the case: more people living longer means more demand for supported living and residential care. Investors like the volume and the predictable cash flow, and JLL’s European research shows care homes are the most active subsector across the continent.
Second, primary care and community clinics are being revisited not just as healthcare provision but as local infrastructure. Savills’ focus on primary care reflects a view that modern, well-located GP surgeries and diagnostics centres are long-term assets because the NHS needs them. These properties often benefit from NHS or long-dated occupational ties, which make them attractive to institutional investors seeking long-term income.
For investors, good deals will be those that combine three things: realistic pricing that accounts for development and operating cost pressures, operators with strong management and margin models and locations that meet genuine demand and are resilient to changes in local funding or health policy.
What’s expected in 2026?
Looking ahead to 2026, the research suggests a careful, step-by-step scenario rather than a dramatic boom. CBRE’s survey data shows many investors expect increased activity and that a majority anticipate a “return to stable development market activity” by the end of 2026, as CBRE puts it. That phrasing signals that the market expects unresolved issues to ease but not disappear. In plain terms, 2026 should see more transactions and more visible development pipelines, but not a free-for-all.
In short, 2026 will be better than 2025 for deal activity, but the underlying problems — staffing, local authority fees, planning — will still need policy attention. If those wider issues are dealt with, then supply can scale more decisively beyond 2026. If they are not, investors will still find niches that work, but the social gap in care and capacity will remain.
Sources:
CBRE: 2025 UK Healthcare Sentiment Survey
JLL: European Healthcare Real Estate Interface
Savills: UK Primary Healthcare Real Estate
FT: Just 86 extra UK care home beds created in 2024, data shows
Christie & Co: Care Market Review 2025
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