Research by international real estate advisor Savills shows that European Care Home investment volumes have recovered in H2 2024 and into 2025, supported by lower interest rates, closer alignment between buyer and seller price expectations, and stronger operator performance.
According to Savills, €1.76 billion was invested in the sector during the first five months of 2025, surpassing deployment levels over the same period in 2021, a year that went on to record the highest annual investment of the decade. This signals renewed investor confidence as care fees increase, financing burdens reduce, and operator performance and profitability improve.
The report notes that the UK will continue to be the most attractive care home market going forward, underpinned by strong pricing power, private-pay demand, and sizeable portfolios, providing attractive opportunities for investors. US REITs are acquiring UK REITs at a premium to market value and leveraging WholeCo structures to boost returns.
In Europe, 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.
Thomas Atherton, Strategy and Market Intelligence Manager, Savills OCM, adds, “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.”
Caryn Donahue, Head of Senior Housing Transactions, Healthcare & Senior Living, Savills OCM, says, “Momentum from last year 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. The rebound in total volumes during H2 2024 and through 2025 has been driven by the strong performance of the UK, Spanish, German and Dutch markets, with cross-border capital continuing to be particularly active.”
Cross-border capital made up 48% of 2024 care home investment volumes and accounted for a large majority (85%) of the activity in January-May 2025. The international real estate advisor forecasts this trend will continue, with Savills European OpRE Investor Survey 2025 reporting that 24% of Care Home investors are targeting pan-European strategies.
The report predicts that, as market sentiment improves, investor expansion will resume, and capital flows into the sector will continue to increase. This is exemplified by the June 2025 merger of Cofinimmo (€6.0bn GAV) and Aedifica (€6.1bn GAV), which created the world’s fourth largest healthcare-focused REIT. The €12.1bn vehicle brings together Europe’s two biggest healthcare REITs and broadened its footprint across the UK, Spain, Finland, Ireland, and Italy.
Charlie Bottomley, Director, Savills Capital Advisors, Debt Advisory, states, “We continue to see 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 lenders 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.”