Overview

Care Homes, Hospitals and Primary Care all present compelling investment opportunities in 2026, reflecting strong demand for services and limited new supply entering the market.

The UK Care Home market continues to be the most attractive in Europe, supported by resilient private-pay demand and private fee growth. While US REIT capital is expected to stay active, anticipated interest rate cuts should support deployment by domestic REITs and UK-based investors.

Roundup

• Large-scale Care Home platform acquisitions defined the UK healthcare market in 2025. Strong H2 activity, built on robust H1 momentum, lifted total UK healthcare investment above £12 billion, the highest level on record and around four times the five-year prior average. Volumes were fuelled by US REITs, supported by their lower cost of capital and ability to utilise RIDEA (management contract) structures.

• In 2025, US REIT Welltower alone deployed over £7.0 billion in the UK Care Home sector. This included one of the largest Care Home transactions ever completed, with its acquisition of Barchester Healthcare (284 elderly care assets, including developments) for £5.2 billion, structured under long-term RIDEA and triple-net lease arrangements.

• In November 2025, Blue Owl Capital was reported to be in talks to acquire a 12-asset UK private hospital real estate portfolio, operated by Spire Healthcare under long leases, from Malaysia’s Employees Provident Fund (EPF), in a potential c. £1.3 billion transaction. While the transaction was reported as targeting completion before year-end, it has not been publicly confirmed as closed. If executed, the transaction would mark Blue Owl Capital's entry into UK healthcare real estate.

• Healthcare development activity has remained subdued since 2022, constrained by elevated build costs, planning challenges, and land values that have been slow to adjust to challenging macroeconomic conditions. While development remains difficult, conditions have improved compared with 12–18 months ago, with stabilising construction costs and improving debt conditions.

• For Care Homes in particular, stronger operational performance, including higher occupancy levels and profitability, are better supporting development viability, most notably within the prime markets. According to Carterwood, average quoted weekly fees for personal care, as at Q3 2025, stood at £1,302 across Great Britain, representing an 8.5% year-on-year increase, while nursing care fees averaged £1,696, up 8.3% year-on-year.

Care Market Update

• Welltower’s H2 2025 UK activity extended beyond Barchester, with it acquiring HC-One for c. £1.2 billion and Aria Care for c.£620 million. Other acquisitions include Danforth Care and several smaller portfolios. Welltower’s UK investment forms part of a broader $14 billion seniors housing acquisition programme across the US and UK.

• Alongside large-scale international platform activity, targeted acquisitions by domestic investors provide evidence of UK capital returning to the Care market. This includes Target Healthcare REIT’s late-2025 acquisition of three care homes and a forward commitment for a fourth (£45 million total), alongside Octopus Capital’s October 2025 announcement of just under £60 million of new capital to support further UK care home investment.

• Care Home development viability has improved through continued private fee rate growth. According to Carterwood, average quoted weekly fees for personal care, as at Q3 2025, stood at £1,302 across Great Britain, an 8.5% year-on-year increase, while nursing care fees averaged £1,696, up 8.3%, improving profitability and the relationship between gross development values and delivery costs.

• The 2025 Autumn Budget confirmed 250 neighbourhood health centres across England, with 120 due to be operational by 2030. Of those first 120, 70 will be new-build facilities, and around 80% of those new builds (~56 centres) are expected to be delivered via public-private partnerships, with the remainder delivered through public capital and refurbishing existing estate through public funding.

Cure Market Update

• A Department of Health and Social Care (DHSC) statement in October 2025 stated that independent providers delivered 6.15 million NHS-funded treatments in the past year — nearly 500,000 more than the year before — underscoring the Government’s reliance on the independent sector to meet its elective recovery targets and restore the 18-week constitutional Referral-to-Treatment standard by March 2029, a target not met nationally since 2016.

• Bupa re-entered the UK hospital market in August 2025 with the acquisition of New Victoria Hospital, followed by an agreement in October 2025 to acquire King Edward VII’s Hospital within London’s Harley Street Health District. These transactions represent Bupa’s first hospital acquisitions since 2008, when it bought the Cromwell Hospital, and signals a renewed strategic focus on expanding owned secondary care capacity and strengthening integration across privately funded elective and diagnostic pathways.

• In parallel, investor appetite for UK hospital real estate has been reinforced by Blue Owl Capital in the process of a c. £1.3 billion acquisition of a portfolio of 12 private hospitals operated by Spire Healthcare Group under long-term net leases, from Malaysia’s Employees Provident Fund (EPF).

• Spire itself is viewed as undervalued on an asset basis, with its owned hospital estate valued at approximately £1.4 billion, compared with a market capitalisation of around £600-900 million through late 2025. Against this backdrop, Spire initiated a strategic review of the wider group, including a potential corporate sale, with expressions of interest requested by 20 January 2026.

• Recent hospital acquisitions by Bupa and the sale of Practice Plus Group’s secondary care business to Narayana Health for c. £189 million in October 2025 highlight renewed strategic interest in privately provided acute care services.

• The potential Spire Healthcare Group buy-out would provide a further indicator of demand in the UK private acute hospital market. Against a backdrop of growing NHS outsourcing and strong private demand, Spire could, following post-acquisition balance sheet optimisation and a continued focus on operational efficiency, present an attractive opportunity for buyers seeking entry into the UK acute care market.

NHS Waiting Lists

Elective surgery backlogs remained elevated through H2 2025, albeit slightly lower than H1 levels, with pressure concentrated by speciality.

In October 2025, the total waiting list stood at approximately 7.3 million incomplete pathways, down from a peak of around 7.7 million in August 2023.

However, the number of incomplete pathways has not fallen below 6 million since November 2022, indicating that while waiting lists have stabilised, they have not yet been meaningfully reduced. Waiting lists are largest in trauma and orthopaedics, ophthalmology, ENT and gynaecology. However, high throughput in private ophthalmology clinics has limited extended delays, with only around 29 per cent of patients waiting more than 18 weeks.

By comparison, pressures remain materially more acute in trauma and orthopaedics, where approximately 41 per cent of patients have been waiting over 18 weeks, while ENT waiting times are longer still, with around 49 per cent exceeding the 18-week threshold.

While overall waiting lists and the proportion of waiting time over 18 weeks have shown limited improvement, the NHS has made notable progress in reducing the number of patients waiting over 52 weeks, reflecting a targeted focus on the longest waiters. These backlogs and wait periods continue to drive increased demand in the private hospital and clinics sector as patients utilise self-pay or private medical insurance.

Private Healthcare In-patient/Day-case Market Activity

Private admissions have reset to a new, higher normal: PHIN data show that private hospital admissions reached a record high of 245,000 episodes in Q1 2025 and remained elevated at 234,000 in Q2 2025, with H1 2025 volumes remaining at over 99% of H1 2024 volumes.

Levels of activity that would previously have represented all-time highs have now become the normalised level for the sector.

Continued self-pay and insured admissions are therefore a positive indicator of demand resilience, particularly given the more challenging wider economic and cost-of-living backdrop, even as NHS elective throughput has increased.

Outlook

• The UK is expected to remain the most attractive Care Home real estate market across Europe into 2026, underpinned by a large and resilient private-pay market, strong underlying demand, and limited new supply entering the market.

• Despite consolidation of some of the largest operators in the market, the sector remains structurally fragmented, continuing to support buy-and-build and scale-driven investment strategies.

• We expect continued deployment from US REITs, supported by their lower cost of capital, often debt-free acquisitions, and ability to utilise RIDEA structures, allowing them to underwrite transactions that may not be economically viable for UK and European REITs.

• The UK remains the primary focus for US capital, with limited appetite for continental Europe, reflecting regulatory complexity and the smaller scale of private-pay markets. In parallel, we expect UK-domiciled healthcare REIT activity to pick up after a quieter period as macroeconomic conditions improve.

• The scale and pace of deployment by US REITs through 2025 has reinforced the UK’s position as the primary destination for cross-border capital in the Care Home sector, with strong competition for high-quality assets and portfolios expected.

• Persistently high NHS waiting lists, alongside the sustained elevation of private admissions, point to ongoing independent sector hospital demand. Recent hospital acquisitions by Bupa, alongside the prospective entry of Blue Owl Capital, highlight renewed strategic interest in UK private acute care.

• As the c. £1.79 billion acquisition of Assura by Primary Health Properties (PHP) progressed towards completion in H2, investor attention increasingly focused on the inherited portfolio of 14 former Assura private hospitals, valued at c. £750 million. PHP has initiated a process to identify a venture partner for the portfolio as part of its post-merger deleveraging strategy, with an outright sale also under consideration.

• Expectations of further interest rate cuts through 2026 are likely to support transaction activity across UK healthcare real estate, with lower financing costs improving both acquisition and development viability. This should underpin continued momentum across care and cure markets into 2026.

Read our latest market insights:

Savills Healthcare: UK Market Roundup – H1 2025

UK Primary Healthcare Real Estate

UK & European Care Home Investment

FURTHER INFORMATION

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