UK Elderly Care MarketBeat Reports

For the data behind the commentary, download the full Q4 2024 UK Elderly Care Report.

Major Uptick in Volumes

2024 saw the highest volume of elderly care home transactions since 2018, exceeding £3 billion. This surge was driven by significant activity in the second half of the year (£2.3 billion) and a record-breaking Q4 (£1.3 billion). US-based investors, particularly Welltower Inc., played a major role, with US-funded investment rising from 10% in 2023 to over 56% in 2024.

Specialist Investors Dominate

Specialist investors accounted for nearly £2.2 billion of total volumes in 2024. This diverse group, comprising around 10 global players, showed a strong appetite for WholeCo and PropCo structures. The UK remains a key market due to stable returns and demand-driven growth. Non-specialist investors are also showing interest, with many expected to focus on PropCo healthcare transactions in 2025.

Operational Transactions Have Their Day

2024 saw a shift towards OpCo and WholeCo deals, which made up 72% of all volume. This was driven by specialist investors willing to acquire operational income streams. While volumes may slip without landmark deals in H1 2025, the outlook for general activity remains strong.

Occupancy

Occupancy levels continued to rise, approaching 90% by Q3 2024, up 1.0% from Q2. Grade A stock reached 86.2%, while sub-prime stock (Grades B and C) surpassed 90% for the first time since pre-Covid. Grade A is expected to follow suit, albeit with some lag.

Average Weekly Fees

AWF remained stable across all grades in Q3, with fees already raised ahead of core inflation (8.3% year on year). Grade A stock (£1,635) commands higher fees than Grade B (£1,257) and Grade C (£1,045). The regional disparity in AWF persists, with southern regions outperforming. Both private and public pay consumers are willing to pay higher fees.

Profit

EBITDARM margins have steadily increased across all asset grades, driven by revenue growth. Grade A continues to achieve higher margins compared to Grades B and C. However, cost headwinds, including higher Employers NIC and National Minimum Wage, will challenge margin growth in 2025. Sustaining recent fee growth of 8.3% will be crucial to weathering these challenges.