When Welltower acquired Barchester in 2025, it did more than complete the largest care home deal on record. It reshaped investor perceptions of UK healthcare real estate and brought the sector firmly into the institutional mainstream. Twenty percent of all UK real estate investment in 2025 was in healthcare, which tell us that scale may prove difficult, but its influence is undeniable. The focus now is on what comes next.
The most immediate impact was visibility. In 2025, more than £10 billion was invested in elderly care homes, accounting for 79% of total healthcare investment. Suddenly, international investors were paying attention. Over the past year, we have seen a marked increase in enquiries for UK healthcare assets (at levels not seen for at least five years) as new entrants began investigating the fundamentals and understanding why the sector makes sense for the long term.
Those long‑term fundamentals are compelling. An ageing demographic profile, persistent structural undersupply and income growth supported by above inflation fee increases from both local authorities and private‑pay residents continue to underpin investor appetite. Our latest healthcare investor sentiment survey indicates that consolidation is set to continue, as both operators and investors seek greater scale, operating resilience and balance‑sheet strength in a more demanding environment.
On the supply side, development constraints remain a defining feature of the market. High land values, planning friction and elevated build costs continue to limit new delivery. Thirty-one percent of our survey respondents cited development challenges as the single biggest issue facing healthcare investment in 2026. At the same time, closures continue to exceed new openings. Net capacity for beds serving older people and dementia care (65-plus) increased by just 1,590 in 2024, following a net loss of 2,077 beds in 2023. This reinforces the structural imbalance between demand and supply.
There may not be another £5 billion‑plus platform sitting out there, either in the UK or globally, but the transaction has shifted perceptions. It has shown how healthcare portfolios can be built and financed, even in a market where assets of real scale are hard to come by. As a result, global investors with existing exposure, including specialist healthcare REITs, are now looking closely at how to put capital to work quickly.
For experienced healthcare investors, the direction of travel is becoming clearer. Diversification is a key theme, alongside a greater willingness to take on operational risk as well as property risk. Those with deep sector knowledge still have the edge. They know how to price risk properly, move fast and compete in a crowded market.
Traditionally, the UK has favoured a clear split between property ownership and care operations. That boundary is beginning to soften. With increasing competition from capital chasing relatively few assets, investors prepared to engage with operational risk are finding opportunities for stronger long‑term returns.
The deal has also served as a useful reference point for owners and operators. Pricing transparency at this level has helped reset expectations. Many assets have been held far longer than originally planned, due to a combination of COVID‑19, the cost‑of‑living crisis and a tougher debt market. In some cases, hold periods have stretched by five or six years.
Looking ahead, we expect competition for high‑quality care assets to remain strong through 2026 and 2027, as owners look to take advantage of renewed demand and clearer pricing. Regulation, including ongoing Competition and Markets Authority scrutiny, will continue to shape the market, but it is unlikely to deter investors from a sector that remains fundamentally undersupplied and now firmly on the map.
Sarah Livingston, head of healthcare, CBRE UK