The UK healthcare sector has had a record year of property transactions, reflecting strong investor confidence in the market, according to a new report from Knight Frank.

Around £8.6bn of UK healthcare property deals have transacted this year, as of the end of Q3, £6bn of which were completed by Knight Frank.

Primary Health Properties’ £1.8bn bid for Assura is the standout deal, which is due to close in the final quarter of the year following Competition and Markets Authority approval.

Knight Frank’s 14th annual Healthcare Trading Performance Survey, whose respondents account for circa 100,000 care beds across 781 UK towns and cities, confirms that the sector has entered a period of growth after a post-pandemic recovery.

UK healthcare operators have delivered growth in EBITDARM (which measures companies’ core operating profitability) margins to an average 30.1% in 2025, up four percentage points from the prior year.

The report reveals 18% of care homes have achieved EBITDARM margins in excess of 40%, up from 13% in 2024, and the proportion of homes categorised as loss-making has fallen year on year from 5% to 3%.

This robust improvement in profitability has been driven in large part by a sector-wide uptick in weekly fee income, Knight Frank said.

Average fees across UK care homes have grown by 9.8% to £1,298 per week over the past year, with weekly fees for personal care experiencing the most profound growth, at 12%.

Meanwhile, occupancy has also experienced a notable bounce-back from the pandemic period, with nationwide care home occupancy reaching 88.7% in 2025 versus 88.3% in 2024.

However, headwinds with rising cost pressures have been exacerbated by the Budget announcement. Staffing costs per resident have increased 7% year on year to £37,877 as wages rise faster than RPI inflation, while property costs per bed have increased to an average of £4,427, up 18% on 2024.

Ryan Richards, associate at Knight Frank, said: “Stock selection will be critical moving forward. As macroeconomic and regulatory uncertainty persist into 2026, cost pressures will continue to be front of mind for operators and investors.

“While fee increases have enabled operators to absorb a proportion of recent cost rises, questions remain over the sector’s capacity to further increase fees at a rate that offsets the impact of cost inflation on balance sheets.”