UK Care Homes H1 2025: Rising Multiples & Global Investment Surge

The UK care sector has long been recognised as a resilient segment of the real estate market, underpinned by demographic trends, stable income streams, and the essential nature of its services. The CBRE UK Real Estate Market Outlook – Mid-Year Review 2025 confirms that these fundamentals remain firmly in place — but adds a notable development: valuation multiples, particularly for high-quality assets, are climbing.

While transaction volumes in the first half of 2025 were slower than initially forecast, the weight of capital targeting the sector, combined with operational outperformance, is creating upward pressure on pricing. This article takes a closer look at why EBITDAR multiples are rising, the differences between asset types, and how investor sentiment is evolving.

H1 2025 – Performance vs Expectations

CBRE’s January forecast anticipated a steady acceleration in care sector transactions throughout the year. The reality in H1 2025 was more nuanced:

• Slower deal completions — Broader market uncertainty, combined with cautious lending, delayed many transactions, particularly in the early months.

• Persistent capital demand — The volume of capital seeking healthcare assets still far exceeded the stock available to acquire, especially in the purpose-built category.

• Senior housing development slowdown — Rising build costs and wider residential market uncertainty constrained new project delivery, although re-sales of existing village units remained robust.

• Operational performance on track — Care homes delivered 12% annualised revenue growth between 2019–2024, consistent with expectations and well above inflation over that period.

• New capital entrants — Pension funds and infrastructure investors entered the sector earlier and more actively than forecast, using innovative structures such as OpCo and PropCo models.

H1 2025 Market Statistics

Recent market data adds context to the valuation story:

• Record transaction volumes — £1.75 billion in H1 2025, the highest six-month total on record and 108% higher year-on-year.

• Occupancy resilience — ~89–90% average in Q1 2025; even Grade B and C stock maintains high levels (91% and 89.5% respectively).

• Average Weekly Fees (AWF) — Record £1,260 in Q1 2025 (+7.9% YoY); Grade A assets average £1,650, vs £1,300 (Grade B) and £1,100 (Grade C).

• Investor mix shift — Majority of new capital is cross-border, with US investors particularly active.

• Operational revenue growth — Care homes achieved 12% annualised revenue growth (2019–2024), driven by both occupancy stability and fee increases.

EBITDAR Multiples on the Rise

The care sector has historically attracted investors seeking long-term, secure income. In 2025, this demand is intensifying:

• Higher-quality stock is scarce — Slowing new development and limited availability of modern ESG-compliant facilities are creating competitive bidding for prime assets.

• Operational excellence is rewarded — Buyers are prepared to pay higher multiples for assets with strong occupancy, premium fee structures, and experienced operators.

• Institutionalisation of the sector — The entry of global infrastructure and pension funds is pushing up benchmarks, as these buyers can often pay more for scale and stability.

• Global capital influx — Over 70% of transaction volume in the sector now comes from US investors, up from 56% in 2024.

Scarcity of prime purpose-built stock, combined with resilient operational performance, is encouraging buyers to pay a premium for secure, long-term income streams. At the same time, the slowing pace of new development, higher construction costs, and regulatory pressures are limiting the addition of new supply. This imbalance is reinforcing the upward pressure on values.

The strategic question facing the market is how to balance current entry multiples with the long-term fundamentals of the sector. Some may choose to deploy capital now, securing exposure to stable, inflation-linked revenues, while others may prefer to wait for more favourable pricing conditions. What remains clear is that scarcity itself has become a defining feature of the sector, and this dynamic is likely to continue to drive both competition and valuations over the medium term.