Strongest H1 In a Decade for Investment into UK Healthcare Real Estate
International real estate advisor Savills reports that the UK healthcare real estate market experienced a significant upswing in investment volumes in the first half of 2025.
The senior housing and care home sector saw £1.5 billion deployed, marking the strongest performance in a decade, according to MSCI data. Care homes led the charge, buoyed by robust private pay pricing, improved operator performance and favourable market dynamics.
Savills notes that international investors, particularly from the US, are increasingly targeting UK healthcare REITs that are trading at discounts to net asset value. Notably, US-based CareTrust REIT acquired CareREIT, while UK REIT Assura’s board initially recommended a bid from KKR and Stonepeak, before pivoting to a merger with PHP, which recently received a 63% majority vote from shareholders in favour. This wave of cross border activity signals significant confidence in the UK healthcare sector’s long term value and resilience.
Another area of strength in H1 2025 was the private hospital sector, fuelled by NHS outsourcing of elective procedures and rising private pay demand. Non-NHS inpatient admissions hit a record 939,000 in 2024, up 3% year-on-year and marking the third consecutive year of record volumes.
Despite positive sentiment, healthcare development activity remains subdued. Rising build costs, challenging debt conditions, ongoing planning constraints, and land values not adjusting to a more difficult macroeconomic environment have slowed development progress in the UK since 2022. New care home delivery has primarily focused on private-pay schemes in London and the South, where development economics are more viable, exacerbating the existing North–South supply imbalance. This said, Savills suggests that signs of recovery, such as easing debt markets and renewed investor confidence are beginning to support new build pipelines.
Savills suggests that recent government initiatives including the Spending Review, UK Infrastructure Strategy, and the NHS’s 10-Year Plan have signalled renewed commitment to healthcare investment, with a focus on technology, primary and community care, and public private partnerships.
Caryn Donahue, Head of Senior Housing and Healthcare Transactions, Savills, says, “Investor interest in UK healthcare real estate remains very strong, supported by a stabilising macroeconomic backdrop and growing policy support for public private delivery, particularly in primary and acute care. In the care home sector, rising wages and immigration changes may put pressure on margins, especially for providers that are reliant on Local Authority funding, but private providers will see less impact.”
Tom Atherton, Strategy & Market Intelligence Manager, Savills, adds, “Strategies focused on private pay demand and operational upside remain well-positioned. With dry powder available and financing conditions improving, momentum in the UK healthcare sector is expected to continue as we head towards the end of the year and beyond.”
