Last week was a significant one for the UK’s care home sector. US healthcare property investor Welltower acquired the portfolio of UK-based Barchester Healthcare in a landmark £5.2bn deal, touted by agents as the world’s largest-ever care home transaction.

Barchester asset: Burwood Grange in Weybridge, Surrey

Barchester is a major player with more than 260 assets, making it the UK’s second-largest nursing home operator.

The deal made Welltower’s parallel purchase of another UK care home portfolio, from HC-One for £1.2bn, seem like a footnote.

Given the sudden entry of a New York-listed REIT throwing serious money at UK assets, investors and owners will be pondering what the shockwaves of such a big investment will mean for the UK’s care home market.

For Barchester, the current management team will remain in place but will benefit from a strategic partnership with Welltower and its ongoing investment in its operating platforms.

The news also highlights an emerging trend of growing international investment across the asset class, especially from the US. Data from Cushman & Wakefield shows that US investment made up 56% of overall deal volumes within the UK elderly care sector last year, up from just 10% in 2023.

It is great for the market, but we shouldn’t expect that again next year
Jack Kelleher, Cushman & Wakefield

According to data from Knight Frank, which advised Barchester on the sale, the Welltower investments mean the UK healthcare sector is on track to reach a record annual deal volume of £12bn in 2025. Bolstered by the Barchester deal and PHP’s £1.79bn acquisition of Assura, the agency says the figures show the sector could be “in the midst of a multi-year boom for capital inflows into UK healthcare”.

Michael Hodges, managing director of capital markets at broker Christie & Co, says the Welltower acquisitions are a “testament to how strong the sector is over here”. He argues that the UK’s ageing population makes it a “great place to be” for investors seeking a resilient cashflow and income stream.

“We expect to see the population of people aged over 80 pretty much double over the next 20 years,” Hodges says. “I don’t think it’s any surprise you’ve got this weight of investment activity focused on the UK space, because everyone sees the demographic trends.”

He adds: “On a weekly basis, we get calls from investors – well-known big organisations that have always shied away from operational real estate. But now they realise there’s huge value in investing in a space underpinned by need, as opposed to high street retail or other parts of the property market, which are more prone to changes in consumer trends, working practices, etc.”

Ageing population: the number of people aged over 80 is expected to almost double over the next 20 years

Spencer J McCarthy, chairman and chief executive of Churchill Living, says the acquisitions are encouraging, representing a market that is “robust and attractive to investors”. But he adds that it also reflects “a market under pressure” where demand continues to outstrip supply.

“It shows that domestic investors could be doing more,” he explains. “There’s a strong opportunity for UK capital to complement international interest and support the creation of high-quality homes that truly benefit older people and their families.”

Peter Farnes, a partner in the healthcare team at Cushman & Wakefield, says the deals represent a “really positive” reflection of the market, although he argues that domestic investors do still play a big role.

“It’s not just Welltower buying stuff,” he says. “While the big deals clearly dominate, there are still other transactions going on, which shows that people are comfortable, that demographics are strong and that the pipeline for acquisitions and development is clearly still there. It’s not a saturated market.”

Future investment

McCarthy says he expects to see international interest continue, especially from “US and European investors who recognise the opportunity”, although he adds that investment must not be driven by returns over residents.

Hodges says he does not expect market growth to slow, particularly in the wake of the Welltower deal. “There’s clearly appetite from all these organisations to deploy,” he adds. “It’s going to be a combination of US, UK and European investment.

“We’ve had US investments in the UK space for well over 10 years. […] Omega have been here for a number of years, as well as Welltower and Ventas. They understand the sector, and they have their infrastructure set up in order to grow their UK-based platforms.”

Farnes argues that as the industry digests the impact of the Welltower acquisitions, other organisations may be inclined to follow suit by bolstering their care home presence in the UK, with Welltower “giving them more comfort to transact or hopefully invest”. He adds: “You might just see the development tap coming back on. The reason all these M&A [merger and acquisition] deals have been happening is because there has been very limited development for the last three years or so.”

How this will evolve is unknown. According to Farnes, there is potential for more sales models to come through, more homes being developed, or more M&A.

Jack Kelleher, associate, healthcare, data and analytics, at Cushman & Wakefield, adds that the booming capital interest could be a “double-edged sword” for the sector’s expectations. “At some point there’s going to be nothing to buy,” he says. “There’s a potential risk that anything that happens next year is not going to be as good as the big deals that have happened this year. It is great for the market, but we shouldn’t expect that again next year.”

Farnes agrees. “Tapering expectations is a good way of putting it,” he says. “I think you’ll just see a bit of a cool-down going into next year.”

However, McCarthy says the “fundamentals are clear” because of the ageing population, the growing demand for independent living and the need to reduce pressure on care services. “There’s plenty of room for growth,” he adds.

What is Welltower?

Welltower chief executive Shankh Mitra

retiWelltower has amassed a huge portfolio of UK senior housing assets, so what is the story behind this US behemoth?

Founded in 1970, Welltower was previously known as Health Care REIT Inc. Now, the company is an S&P 500 firm headquartered in Ohio with a market capitalisation of $125.1bn (£95bn). It has since amassed a portfolio of more than 2,000 senior and wellness communities across the US, Canada and the UK.

The REIT refers to itself as “a product company within a real estate ‘wrapper’” and as having an “unconventional culture”. It says it is “at the centre of the silver economy” and describes its real estate portfolio as “unmatched” and “positioned at the intersection of housing and hospitality”.

The start of the REIT’s UK journey can be dated back to the mid-2010s, with the business reporting in 2016 that it had acquired a number of care homes.

In 2017, it signed a development partnership with Quantum Group, giving Welltower the option to acquire £250m of Quantum’s development pipeline, while last year it snapped up Bridgepoint’s Care UK arm and a portfolio of 168 care homes.

Welltower remains active beyond the UK, completing around $23bn (£18bn) in property deals and debt repayments so far in 2025.

Its commitment to the senior living sector is also changing, with the October launch of its ‘Welltower 3.0’ strategy. Chief executive Shankh Mitra (pictured) said the business was “intensifying” its focus on seniors housing and accelerating its operational modernisation as part of a new era. Mitra added that the firm was “excited to expand our presence in the UK”.