Specialist business property adviser, Christie & Co, has today launched its Business Outlook 2025 report which reflects on the themes, activity and challenges of 2024, and forecasts what 2025 might bring across the sectors in which Christie & Co operates, including in the care sector.

Market overview

Christie & Co labels 2024 as a year of growth in the UK care market, with the majority of operators having reported improved occupancy levels, a reduction in agency usage, and a return in buyer confidence which resulted in an increase in transactional activity across the market.

Small/medium-sized groups (groups of 3 to 19 care homes) were the most active buyer group in 2024, thanks largely to the return of occupancy. This is a notable shift from the most active in 2023 which was first-time buyers and independent purchasers. However, deal times continued to be delayed as issues with the Care Quality Commission (CQC) persisted.

Christie & Co also notes a reduction in the number of closed, vacant care homes in 2024 – this asset class made up 12% of the company’s healthcare sales in 2024 compared with 16% in 2023. This is largely due to a material reduction in closed care home instructions and is not a reflection in declining investor appetite for re-purposing this stock.

There was a clear re-emergence of real estate investment activity following a relatively benign market environment in 2023, whereby investors adjusted to a range of factors including higher interest rates, inflationary pressures and an upward movement in government gilts. Christie & Co witnessed yields stabilise in 2024, with market activity seeing a notable pick up.

​​The land and development market faced stronger headwinds due to construction cost inflation, ongoing challenges in the planning system, and the availability of debt. However, the need for future-proof care beds remains undiminished and the underlying ESG credentials, together with future bed demand, remain compelling for investors. Christie & Co expects the combination of improved operational trading performance and stabilisation of construction costs, to provide increasing confidence to return to the development markets, resulting in an uptick in demand for consented sites and transactional activity forecast for 2025. A greater number of developments are coming forward in untapped regions including the southwest of England, Wales and London and it is expected that this will continue into 2025.

Price movement

Christie & Co notes that higher interest rates hampered new deal activity early in 2024 and the calling of a general election created uncertainty in the market. This led to buyer hesitancy and a decline in the number of care homes coming to the market. Positively, activity levels increased in Q3 following a reduction in interest rates and the general election result. The impact of the changes in employer National Insurance contributions (NICs) in the Autumn Budget is yet to be fully understood but the momentum of the transactional market was undiminished in Q4. Given the wider turbulence, underlying demand from investors remained strong with good prices achieved. Christie & Co’s price index reflects this with a 1 per cent overall increase.

Market predictions

In the care market in 2025, Christie & Co expects:

• Increased activity with interest rates easing
• Increased deals funded by REITS
• Continued first-time buyer activity
• Margins squeezed on those dependent on local authority fees
• ESG credentials will become increasingly important for both owners and funders
• Existing operators will continue to expand with a preference for businesses with upside
• Concern around staffing cost increases versus local authority fees
• Healthcare will continue to be a key target sector for investors

To read the full business outlook report, visit: https://www.christie.com/news-resources/business-outlook-2025/care/uk