Christie & Co Forecasts 2026 Care Market Growth As Prices Rise 7.1% And Investor Demand Surges

Specialist business property adviser, Christie & Co, has today launched its Business Outlook 2026 report, which reflects on the themes, activity and challenges of 2025 and forecasts what 2026 might bring across the sectors in which Christie & Co operates, including in the care sector.

The report begins with an overview of the care home investment market. Christie & Co notes that the market continues to attract significant interest, particularly from US-based funds. A notable trend is the emergence of management contracts under the RIDEA structure, which allows REITs to own both the operating company and the underlying property – this model has already been adopted by major players, with Welltower acquiring Care UK, Barchester, and HC-One under this framework. Despite these structural shifts, yields have remained relatively stable, ranging between 6 per cent and 10 per cent.

At the same time, international investors are showing increased appetite for exposure to the UK market, reinforcing its position as a key sector for global capital.

In the development market, the pace of new care home builds continues to lag behind market demand, largely due to a drawn-out planning process and the limited appeal of certain areas where private pay is scarce, resulting in 77 new build care homes opening over the course of the last year, providing an additional 4,795 beds at an average size of 62 bed spaces.

In the past year, there has been a larger number of beds created by extending existing care facilities, with an additional 6,551 beds being built via the extension of 156 existing care homes. Although construction costs remain high in many regions, there were signs of this easing during the second half of 2025, which is a positive shift for the development sector.

In the going concern market, trading performance has generally improved, supported by strong occupancy levels and a reduction in reliance on agency staff. Positively, the number of distressed cases handled by Christie & Co’s team decreased by 22 per cent in 2025, reflecting improved trading conditions across the sector. Transactional activity heightened across assets of all sizes in 2025 – from small seven-bed homes to large facilities with over 100 beds. Meanwhile, not-for-profit providers continue to rationalise their portfolios, adding further momentum to market dynamics. Many operators are now seeking opportunities to expand, even as the number of care homes coming to market has fallen by approximately 15 per cent. Bank appetite for lending within the sector remains positive, and there is a notable emergence of a strong first-time buyer market.

PRICE MOVEMENT

Occupancy rates are now generally exceeding pre-pandemic levels, and staff costs are under control. The sector is benefiting from foreign sponsorship licenses, which have led to a decline in agency costs over the past couple of years. Despite some press indicating otherwise, the majority of providers are showing improved profits as a result. This, combined with the limited supply of stock entering the market, led to competitive bidding in 2025 and a 7.1 per cent increase in the average price paid for care homes sold through Christie & Co. Many lenders are also turning on the tap once again, and the industry continues to attract new investors seeking a more defensive-oriented market.

MARKET SENTIMENT

As part of its annual sentiment survey, Christie & Co surveyed care providers across the country to gather their views on the year ahead.

The results highlight the funding and operational challenges that care operators continue to face, as 38 per cent of respondents said they feel negative about the year ahead. The overall position, however, feels more optimistic, with 62 per cent of respondents saying they feel either positive or neutral about the sector in 2026.

When asked about their sale and acquisition plans, 58 per cent stated that they are looking to buy and/or sell this year, which is in line with responses from the 2024 survey.

PREDICTIONS FOR 2026

In the care market in 2026, Christie & Co expects:

• Momentum in the transactional market will continue as the cost of debt eases
• Healthcare will remain an attractive asset class for both UK and international investors, with REITs acquiring portfolios to provide traditional leasehold or management agreement models
• We’ll see the continued emergence of new entrants providing a going concern exit route for smaller care home owners
• An ongoing shortage of new-build openings will limit new bed supply, and occupancy levels will remain strong

Richard Lunn, Managing Director – Care at Christie & Co, comments,
“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, which shows the desire for growth in the sector.”