Investors continue to bet on the robust demand within the healthcare sector, its stable operational performance, and its ability to generate strong returns, further bolstered by favorable macroeconomic conditions. According to data from CBRE, 96% of investors anticipate increased volume in 2025, up from 80% in 2024.
Specialized care homes are expected to see the highest demand in 2025. This trend is driven by sustained government investments in specialized care services and the rising need for these services across all demographics.
Elderly care homes remain a strong magnet for investment as the aging population fuels growing demand. Age-related healthcare services have proven resilient to economic fluctuations, offering sustainable long-term cash flows.
Operators are equally optimistic, with 62% expecting to expand their portfolios over the next five years. Operational performance has improved across the board, driven by higher fees and more efficient staff cost management, resulting in a decrease in vacancy rates in care homes to 4.3%. However, cost pressures continue to pose challenges, particularly with the anticipated increases in National Insurance Contributions and National Wages in 2025.
While investment activity remains promising, the development market faces persistent challenges, including land valuation, financing sustainability, and construction costs, in addition to slow planning approval processes. Despite these hurdles, 46% of developers plan to initiate more projects in 2025, with 76% expecting a rebound in development activity by the end of 2026. These challenges may create opportunities for investment and the repurposing of existing properties across multiple sectors.
ESG (Environmental, Social, and Governance) criteria remain at the forefront, highlighting shifting stakeholder expectations for sustainable buildings. The research reveals that 91% of investors now state that ESG factors will influence their investment decisions, up from 86% in 2024, further emphasizing the healthcare sector’s potential to deliver a positive ESG impact.
