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UK & European Care Home Investment

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Contacts & Related Research

Cross-border capital drives strong recovery

Contents


Key Points
  • Care Home investment across the seven core European markets assessed in this report averaged €2.1 billion a year in 2016–19, climbed to a €5.0 billion peak in 2021, then fell back to €2.2 billion in 2024 as rising building and operating costs, higher interest rates, geopolitical uncertainty and operator distress forced investors to retreat.
  • Investment volumes have rebounded in H2 2024 and into 2025, supported by lower interest rates and narrowing bid-ask spreads. In the year to May 2025, investment volumes outpaced 2021 across the same period, with €1.76 billion deployed, signalling renewed investor confidence as care fees increase, financing burdens reduce, and operator performance and profitability improve.
  • In Savills European OpRE Investor Survey 2025, the share of respondents targeting Care Homes rose from 16% (2024) to 35% (2025), demonstrating the renewed investor appetite in the market.
  • Cross-border capital made up 48% of 2024 investment and has accounted for 85% in January–May 2025, as international capital drives the recovery, via selected opportunities across geographies.
  • The UK remains the most attractive market, underpinned by strong pricing power (tenant demand means operators can increase fees) and sizeable portfolios. US Real Estate Investment Trusts (REITs) are acquiring UK REITs at a premium to market value, and leveraging WholeCo structures to boost returns.
  • Spain’s acute supply shortfall and low cost per bed offers investors good value and near-term growth, while Germany’s sizeable, insurance-backed market, supported by strong fundamentals and scale, is winning back investors as sentiment improves following recent operator distress.
  • The June 2025 merger of Cofinimmo and Aedifica into one €12.1 billion vehicle creates the world’s fourth-largest healthcare-focused REIT, with a broadened footprint across the UK, Spain, Finland, Ireland, and Italy. As market sentiment improves, we expect investor expansion to resume and capital flows into the sector to continue.
  • Europe has become a renewed focus point for global capital, with investors drawn to its faster adjustment to macroeconomic conditions, quicker repricing, and improving fiscal outlook, particularly in comparison to the US. This shift is exemplified by Blackstone’s record €9.8 billion raise for its Europe-only real estate fund in April this year.


Introduction

Care Homes remain a compelling asset class, underpinned by Europe’s ageing population and a stark supply-demand imbalance.

While the sector has faced headwinds over the last few years, including a more challenging financing environment and increasing operational costs, investment volumes began to rebound in late 2024 and are set to recover further in H2 2025 and beyond as rates ease and investor confidence returns.

This report frames real estate in its global context, looks at various routes to market and their relative advantages, analyses investment volumes and trends, highlights key transactions, and discusses challenges and opportunities across seven of Europe’s core Care Home markets: the United Kingdom, Germany, France, Spain, the Netherlands, Belgium and Italy.

It assesses which markets have attracted the most investor interest in recent years, as well as evaluating those that now appear best positioned for future growth.

Our analysis utilises desktop research, data evaluation, proprietary insights and interviews with leading investors who are active in Europe’s Care Home real estate markets:


International Expansion: Up to 2022

Cheaper debt and attractive risk-adjusted returns

In the decade leading to 2022, strong macroeconomic performance and access to cheap capital, combined with structural demand for Care Homes (ageing populations and growing supply-demand imbalances), led to the creation of large providers that were often active in multiple geographies.

Real estate investors such as Aedifica, Cofinimmo, and Healthcare Activos, alongside Care Home operators like Clariane (formerly Korian) and Emeis (formerly Orpea), significantly expanded their global footprint, in Europe and internationally.

This expansionary phase was propelled by strong cross-border capital flows into European Care Homes, as well as the emergence of large OpCos funding their growth with sale and leasebacks.

In larger markets, national REIT platforms such as Target, Impact (now Care REIT) and Nrep, and funds such as Octopus and Civitas, also built significant portfolios with key operator relationships.

Despite Covid-19, which led to reductions in profitability, rising costs, and staffing pressures, real estate in Europe’s core Care Home markets saw decade-high capital inflows between 2020 and 2022, reaching over €5 billion in 2021, compared to a pre-pandemic average of around €2.1 billion (2016–2019).

This surge was underpinned by even cheaper debt than in the years prior and an active sale-and-leaseback market, with a perception that Care Homes offered attractive risk-adjusted returns relative to other real estate asset classes.

 

The Retreat: 2022 to 2024

Geopolitical risk, inflation and higher interest rates

As occupancy was recovering and Covid-driven operational pressures were easing, a new wave of global disruption emerged from 2022 onwards, with war breaking out in Ukraine, the highest inflation and interest rates in over a decade, and growing geopolitical uncertainty as governments prepared for the possibility of conflict, both military and economic.

Central banks deployed aggressive rate hikes from the second half of 2022 through 2023 and 2024.

Investment activity slowed sharply, with capital becoming harder to access and buyers retreating as investors focused on divestments, often at discounts, in order to deleverage.

Annual investment in the core European Care Home markets addressed in this report declined for three consecutive years, dropping from €5 billion in 2021 to just €2.2 billion by 2024.

Reduced Real Estate Investment Appetite

Whilst healthcare real estate continued to offer strong returns, the illiquidity of the underlying assets, higher cost of leverage and higher bond yields, compared to vendor expectations on PropCo yields, made real estate less attractive on a risk-adjusted basis, leading institutional investors to reallocate capital to lower risk government and corporate bonds, where deeper secondary-market liquidity and faster settlement cycles make trading and exit more efficient.

Another group of investors that historically have been very active in Healthcare, REITs: tax-efficient vehicles that own and manage income-generating property while distributing most of their earnings to shareholders, also reduced their capital deployment.

UK and European REITs continued to see strong rent collection, but the public markets did not draw a distinction between real estate asset classes (such as office, retail and healthcare) and many traded at significant discounts to Net Asset Value (NAV), meaning the company market capitalisation was lower than the value of its underlying assets, limiting their ability to raise fresh equity to deploy.

Being unable to raise equity meant debt was also more expensive, as the risk to lenders increased, leading to a marked slowdown in transaction activity across the sector, as REITs have historically been responsible for a large proportion of capital invested.

Despite recovering Care Home occupancy across Europe, several operators encountered financial distress due to excessive debt, rising interest rates, and increasing operational costs. Many became overleveraged after aggressive expansion during the growth phase up to 2022.

Some prioritised speed of growth and volume of assets over quality, leaving them exposed when performance fell short of expectations. The culmination of these factors led to a wave of insolvencies across the sector.


Care Operator Scandal in France

The publication of Les Fossoyeurs ("The Gravediggers") by investigative journalist Victor Castanet brought to light a number of allegations about the severe neglect of care residents and financial misconduct that engulfed Orpea (now Emeis), a French operator, in January 2022.

Yves Le Masne, the CEO of 11 years, was removed the same month, and the market cap dropped over 95% from a peak of €7 billion to below €150 million. The broader sector was tainted by association, and this particularly impacted the other listed provider, Clariane, although CEO Sophie Boissard was able to successfully rebut many of the allegations concerning care quality at Clariane.

As a result, operators were forced to restructure their balance sheets and dispose of both real estate and operational assets into a weak market to reduce debt.

Clariane is on track to meet its €1 billion disposal target by the end of 2025 (including exiting the UK market entirely with the sale of Berkley Care), while Emeis has signed agreements on €1 billion in disposals since mid-2022, with a goal of reaching €1.5 billion by the end of 2025.

Insolvencies in Germany

In Germany, operators must justify fee increases and obtain approval from regulators, limiting their pricing flexibility. Increases in regulated fees to compensate for operating inflation and higher staff costs were slow to come through, which, when combined with lower structural profit margins (due to high rents and leverage), led to a sharp rise in German operator insolvencies in 2023.

Major German groups such as Convivo and Curata collapsed, alongside a wave of smaller providers. Operators are highly exposed to government policy, particularly in markets where care fees are regulated.

By contrast, in the UK, approximately 50% of the market is uncapped private pay, allowing operators to increase fees and pass on cost increases more directly and preserve their margins.

These contrasting dynamics highlight the importance of market selection, regulatory and geographic diversification in managing operational and financial risk.

Return to Growth: 2024 Onwards

Sentiment and Capital Returns

Care Home investment in H1 2024 was subdued, down 39% from an already low point in 2023, but it rebounded in H2 2024, with €1.50 billion deployed – 22% above the same period in the previous year. Full-year volumes reached €2.24 billion, only 8% down on 2023.

Momentum from H2 2024 has carried into 2025, supported by falling interest rates and a narrowing gap in buyer and seller price expectations, which had been distorted during the earlier period of international expansion. By May 2025, cumulative investment volumes for 2025 have reached €1.76 billion, exceeding the €1.61 billion recorded over the same period in 2021, which saw the highest full-year investment volumes in over a decade.

Improving operator performance and a more favourable macroeconomic environment to last year has bolstered Care Home market sentiment. In Savills European OpRE Investor Survey 2025, the proportion of respondents looking to invest in Care Homes stood at 35%, up from just 16% in 2024.

Annualising investment volumes up to May 2025 this year makes this the second highest annual investment volume in over a decade. The rebound in total volumes during H2 2024 and through 2025 was driven by the strong performance of the UK, Spanish, German and Dutch markets, with Cross-border capital continuing to be particularly active.

US REITs Leverage WholeCo Model in the UK

In 2024, the UK saw a surge in investment, with US capital playing a prominent role. One strategic approach was the use of management contracts and RIDEA structures (for US REITs), which offer greater flexibility and allow real estate investors to participate in the operational upside of the asset, enhancing return potential.

US REITs have actively used this model when acquiring UK assets and have benefited from significant weekly fee uplifts. However, REITs are subject to regulatory differences across jurisdictions. UK REITs face tighter constraints, as at least 75% of their income must come from property rental, limiting their ability to share in operational profits and making WholeCo participation more difficult.

With bid-ask spreads too wide on PropCo transactions, this gave the American REITs an advantage in the market, especially when WholeCo’s were the main deals occurring in 2024.

In another strategic approach, US REIT Omega Healthcare Investors has targeted Tier 1 and Tier 2 stock, while other investors have focused on Prime and Super Prime. As a result, Omega has faced less competition and has secured assets at attractive pricing. As of May 2025, US Healthcare REITs were trading at a 20.6% premium to NAV, positioning them to acquire UK Care Home assets at discounted valuations and capitalise on transatlantic arbitrage as their UK-listed peers remain constrained by persistent NAV discounts and difficulties raising capital.

Care Home Ownership Models
Germany Rebounds

Despite being one of the hardest-hit markets over the last few years, we saw transaction volumes in Germany lifted this year by Deutsche Wohnen’s €380 million sale of 13 Hamburg Care Homes to the city’s holding company, HGV, marking a return to public ownership.

This followed a separate 2024 disposal by Deutsche Wohnen of a 26-asset elderly care portfolio to Civitas Investment Management for over €300 million. Savills advised Civitas on that transaction, with Alloheim stepping in as the new operator.

Operators Recover

The operator landscape across Europe remains highly fragmented, with the top five operators accounting for just 11.9% of beds on average across core markets.

This presents an opportunity for pan-European investors to build scale through aggregation. While markets are fragmented, platforms of scale do exist, offering potential for both portfolio and single-asset expansion.

In addition, several large pan-European operators, such as Emeis and Clariane, manage multi-country portfolios that could present sizeable acquisition opportunities. Operators are recovering from previous challenges, creating opportunities for investors to partner with them and support future expansion.

Operators are reporting continued improvement in occupancy rates year on year, returning to or already exceeding pre-pandemic levels, and fee uplifts from residents over the last year in previously struggling geographies such as France and Germany are improving profitability.

After experiencing substantial share price declines, with Emeis falling from over €5,000 in early 2022 to under €5 by late 2024, and Clariane from around €19 in 2021 to under €1 in March 2024 – both companies have shown notable recoveries.

Emeis has rebounded to approximately €12 and Clariane to around €4, as at May 2025. This suggests a potential inflection point has been passed in the European Care Home sector, as two of the most severely affected businesses are beginning to recover strongly.

Another positive indicator for the sector is EQTs recent proposal of a €220 million equity injection into Colisée, a major French pan-European Care Home operator, as part of a restructuring plan to address the company's financial challenges.

Recovery Outlook Strengthens as Capital Conditions Improve

Given the growing supply gap across the UK and Europe, and an increasing number of outdated, unfit-for-purpose assets, there is a clear need for significant further investment.

A return to growth seems likely as interest rates lower, debt cheapens, bond yields decrease, deleveraging occurs, and purchase prices trend towards a happier medium for both buyers and sellers.

While the recovery is expected to be gradual, early signs of renewed growth are clearly beginning to emerge across the sector.

Debt Market Commentary

There continues to be robust liquidity across both bank and non-bank channels, driven in part by the continued low level of transaction volumes.

With fewer deals in the market, lenders are competing intensely for opportunities, particularly in the OpRE sectors, which remain a top priority for most capital providers.

Non-bank providers have further stepped up their presence in continental Europe, broadening their underwriting mandates and looking to deploy capital on more complex or transitional assets.

Overall market competition is driving margins tighter, leverage higher, and borrowers are benefiting from increasingly flexible structures, including extended interest-only periods, covenant-lite protections, and bespoke amortisation profiles.

Where is the capital coming from?

Both domestic and cross-border capital remains active across Europe’s Care Home markets, although investor focus varies by country.

France, Spain, Belgium, and the Netherlands all show a strong domestic focus: in each, two of the top three most active investors are domestic, with only one international player represented.

This shows a balance of interest, but with a weighting towards nationally-based investors.

By contrast, in Italy, all of the most active investors are France-based, underscoring the limited role of domestic capital in that market. The UK is another geography that is seeing cross-border capital inflows, but from further afield, particularly US investors.

Cross-border Capital

Cross-border investment in European Care Homes has been a consistent trend for over a decade, with the sector offering investors access to a broader range of assets while reducing reliance on any single social security system or care model.

Across Europe’s core Care Home markets, cross-border capital accounted for almost half (48%) of total investment in 2024, the highest proportion since 2020 (52%) and markedly higher than the 37% in 2023.

In 2024, notable deals included UK-based Octopus entering the Spanish market, Spanish investor Healthcare Activos expanding into Germany and deepening its presence in Belgium, and Civitas making its first investment in Germany.

As we reach the halfway point of 2025, cross-border capital is driving investment volumes, accounting for the vast majority (85%) of investment in the year up to May.

The strategic value to investors of geographic diversification has been underscored by recent challenges in the French and German markets.

Case Study: Birth of a European Care Giant
US Investment Leads the UK Market

While continental Europe has recently been attracting UK and European capital, the UK market specifically has seen a marked rise in US investor activity. Over the past five years, the US has emerged as the largest source of cross-border capital into the UK Care Home sector, accounting for more than two-thirds of total foreign investment.

US REITs have recently acquired a number of assets in the UK market: Welltower acquired Care UK in 2024, and Omega Healthcare Investors purchased Akari Care’s portfolio of 32 Care Homes from The Carlyle Group in 2024, and acquired the Four Seasons 47-property UK Care Home portfolio for ~€300 million in 2025. Savills conducted valuations for the Four Seasons deal on behalf of Omega.

CareTrust REIT completed its acquisition of Care REIT in May 2025 for ~€740 million (including cash and assumption of debt), at a ~33% premium to its share price, indicating that they perceive UK Care assets as undervalued.

Meanwhile, UK-based REITs have struggled to raise capital over the last two years, constrained by smaller market caps and persistent NAV discounts.

Although US capital has dominated recent deal flow, some domestic investors are still actively deploying funds. UK-based Elevation has completed several transactions, including the ~€250 million acquisition of the Berkley Care Group from Clariane in February 2024.

Following recent scandals in continental Europe, EU operators have retreated from the UK market. Clariane had previously shown interest in the UK but has exited with the Berkley sale.

Cross-Border Capital To Continue

We expect that cross-border capital will continue to be an important element of the investment landscape in Europe going forwards.

Savills 2025 European Operational Real Estate Investor Survey found that, of those targeting the Care Home sector, close to a quarter (24%) are targeting markets outside of their home country or targeting pan-European platforms.

Desire for geographically diverse pan-European platforms, increased selectiveness about stock following the period of retrenchment, and a diverse range of opportunities across markets are likely to drive further cross-border capital flows.

Where to invest

Care Home investment remains most attractive in the UK, with strong interest also building in Spain and selected opportunities emerging in Germany. Through 2024 and in 2025 to date, the UK Care Home sector received the greatest volume of capital inflows among the core markets, with over €2.7 billion invested.

This has shown the resilience of the UK market, at a time when Germany, the largest market and previous investment leader, has faced challenges. In the UK, care fees have increased significantly over the last five years, driven by the private-pay segment, making certain developments more financially viable as there is a greater capacity to pass on inflationary costs to end users. US investors were drawn to the market by the ability to structure WholeCo deals and benefit from these price increases.

Going forward, investors are highlighting the UK as Europe’s most attractive market, driven by a diverse range of sizeable real estate portfolios, strong fee uplifts, and relatively low bed supply compared to other mature markets.

Notably, around 70% of UK Care Home stock is over 20 years old, with more than 25% lacking en-suite facilities and 70% not having full wet rooms. While there is opportunity to revitalise ageing supply, lower-end assets are often not fit for purpose, further strengthening the case for new development. However, development has its challenges and is constrained by a shortage of sites with planning permission and a slowdown in planning applications.

At the same time, rising construction and staffing costs add further pressure to the equation. Despite these challenges, the UK remains a key market for expansion, offering both scale and long-term growth potential.

Investors flock to Southern Europe

Spain and Italy, which are both undersupplied, less mature markets, are attracting growing investor attention. Italy, with the lowest care coverage of the core markets we are examining, is expected to evolve significantly over the next 10 to 15 years, with some investors identifying it as an attractive market which still prices with wider yields than other markets across Europe.

Spain is the clear current favourite in Southern Europe, with investors drawn to the significant demand-supply imbalance and institutional investment still lagging a decade behind the UK.

With the lowest cost per bed in Europe, Spain has fostered a generation of highly efficient operators.

Investment in Spain

Development activity in Spain is accelerating. Octopus, for instance, is forward funding new schemes and opened a Madrid office last year to support its expansion.

However, the surge in investor interest is outpacing the availability of viable opportunities, with recent construction and land costs increasing, further reducing the pool of feasible projects, particularly in core urban areas like Madrid and Barcelona, where competition is intensifying.

As a result, attention is shifting toward smaller regional cities, where land is more accessible, construction conditions are more favourable, and supply-demand imbalances remain more acute than in larger, developed urban centres.

Public-private collaboration, such as Madrid’s Plan Vive releasing land for care development, should help alleviate some of these issues. However, further government-led incentives are needed to attract investment and meet growing demand.

Investment in Germany

Strong Fundamentals and Select Opportunities

Although currently avoided by some investors due to high operational costs and weak market sentiment, Germany is seen by others as one of Europe’s most promising long-term markets and more attractive for investors from a pricing perspective than previously.

Its elderly population growth and scale of the care market offer strong fundamentals, provided investors can identify the right operator, lease structure, and asset quality.

Sentiment is gradually improving following a period of reputational and operational challenges, with rent performance recovering and confidence returning in regions with trusted operators.

Despite slow occupancy recovery in some areas, Germany remains highly investable due to its scale and robust insurance-based funding model.

Markets like Germany and France have strict regulatory limits on increasing fees, meaning operators cannot raise rents as easily. Yet despite these constraints, operators in both Germany and France are now reporting care fee uplifts. However, France’s regulation, where there are strict limitations on the approval of new care beds, makes it difficult to deliver new schemes, limiting short- to mid-term opportunity.

Similar regulatory constraints on fees and new Care Home openings exist in both Belgium and the Netherlands. While opportunities are present, investors note they are limited in potential scale given the smaller size and maturity of these markets.

While investor caution remains around operational challenges and rent viability, flight to quality remains and sentiment is shifting toward highly selective, quality-driven strategies. WholeCo opportunities offer a way to enhance yields and offset rising costs.

The UK, Spain, and Germany stand out as key markets for Care Home investment, though opportunities exist across Europe, with Octopus, for example, planning to expand into several new geographies over the next five years.

 

 

Conclusions
  • Across Europe, operator performance is improving, with occupancy levels recovering and care fees increasing, including in previously challenged markets such as France and Germany. As financial conditions stabilise, investor confidence is expected to strengthen further, with significant quantities of dry powder ready to be deployed into the sector.
  • Debt markets remain highly liquid, with both bank and non-bank lenders actively competing for opportunities, particularly in operational real estate. This competitive environment is driving tighter margins, higher leverage, and more flexible structures, making debt accretive again in the Care sector.
  • Strong liquidity is enabling the refinancing of challenging assets, with borrowers increasingly using a mixture of senior, mezzanine, and preferred equity to optimise debt sizing and preserve value.
  • Cross-border capital accounts for 85% of 2025 deal flow, led by US investment into the UK, and European investors pursuing pan-European strategies. While some are building diversified platforms, others are selectively targeting high-quality assets in markets with strong demand fundamentals.
  • The UK continues to lead on pricing power and investment opportunities, particularly for investors using WholeCo structures.
  • Spain offers short-term growth potential, with large supply-demand imbalances, although it faces development constraints. Germany presents longer-term stability, backed by scale and secure funding.
  • US REITs are playing a leading role in the UK Care Home investment rebound, enabled by regulatory flexibility, premium to NAV valuations, and appetite for WholeCo and management contract structures. Their ability to capture operational upside is reinforcing their competitive advantage, especially as UK REITs are constrained by structural rules and persistent discounts to NAV.
  • Looking ahead, the most compelling opportunities come from markets with scale, growing supply-demand imbalances, and regulatory headroom. Sourcing selected attractive opportunities is key, and local, on-the-ground market knowledge represents a significant competitive advantage for investors.


FURTHER INFORMATION

Savills Operational Capital Markets