2024 was a major year for UK elderly care investment with volumes breaking the £3bn threshold for the first time since C&W began analysis. Underneath this, we have observed that over the past three years, the UK care market has attracted ever growing interest and investment from U.S. based investors. In 2024 alone, U.S. investment in the UK reached £1.7 billion, representing 56% of total deal flow - with nearly £1.3 billion concentrated in Q4 alone. The table below provides a breakdown of investment by buyer domestic base over this period.
UK Elderly Care Investment by Buyer Country
Source: C&W Healthcare Transactions Database
The key question is: why has the share of investment shifted so significantly toward U.S.-based investors? In this blog, we explore this shift, examining whether fundamental macroeconomic events have profoundly impacted the U.S. and UK care markets, or if specific market dynamics, sector characteristics, or key performance indicators (KPIs) in the UK have signalled to U.S. investors that the sector presents a stronger investment opportunity than that of other territories.
U.S. Elderly Care Market vs UK Elderly Care Market
To understand this shift, we first need to examine the fundamental differences between the care offerings and market dynamics in the UK and the U.S. In the U.S., senior housing and care are divided into four distinct community types, each providing progressively higher levels of care - and typically commanding higher fees:
- Independent Living (IL)
- Assisted Living (AL)
- Memory Care (MC)
- Nursing Care (NC)
In contrast, care in the UK is less stratified and contains a notable smaller component of seniors housing, thus generally categorized into two main types of homes:
- Residential Homes
- Nursing Homes
The first major difference between the two markets lies in market maturity. The U.S. senior housing and care sector is far more developed, with an estimated 3.2 million units of investment supply (NIC) and an elderly population (aged 65+) of approximately 58 million (2023 - U.S. Census Bureau), resulting in a penetration rate of 5.5%. In comparison, the UK market has around 460,000 beds for an elderly population of approximately 12.9 million (2023 - ONS), yielding a penetration rate of 3.6%.
It’s worth noting that the U.S. has invested significantly more in seniors housing (offering zero to low levels of care) and has embraced this model more widely than the UK. Nevertheless, the data makes it clear that the U.S. market is considerably more established by scale and penetration.
One of the most significant differences in market dynamics is the level of operator consolidation - specifically, the number of homes managed under a single operator.
% of Units by Number of Properties Operated (U.S.A and UK)
| U.S. Source: NIC | UK Source: LaingBuisson CareSearch |
A key difference in market dynamics is the level of operator consolidation. The UK market remains highly fragmented, with 88% of homes owned by small, independent operators - often family-run businesses managing up to 10 homes. In contrast, the U.S. market has undergone significant consolidation, with 48% of homes operated by larger groups managing 25 or more properties. This lack of consolidation in the UK presents a compelling opportunity for U.S. investors, as acquiring and integrating smaller operators could unlock substantial economies of scale, drive operational efficiencies, and create stronger regional or national platforms.
This driver is perhaps nothing new when it comes to non-domestic investment looking at the UK market, but the fact remains, and we continue to observe U.S. investors with active deal flow on this basis.
Investment Volumes and the Impact of Macroeconomic Events
Investment Volume by Quarter (U.S. and UK)
UK Source: C&W Elderly Care Trading Database U.S. Source: NIC
As many would expect, the larger size of the U.S. market means it trades with far higher volumes than the UK. However, when analysing investment trends over the past six years, it's clear that both markets respond similarly to key macro socioeconomic events.
- The onset of COVID-19 had a significant impact on both economies, and the care sector within each was no exception with transaction volumes declining sharply in Q1 2020.
- Both markets saw a rebound in investment activity, with volumes picking up after a short lag once COVID-related legal restrictions were lifted (U.S.: late 2021, UK: mid-2021).
- The steady rise in base interest rates throughout 2022 and 2023 slowed transaction flow in both markets vs historic levels. However, investment activity increased following either speculation or official announcements of rate cuts in the short to medium term.
Scale aside, these patterns highlight how key macroeconomic events affect both the U.S. and UK care markets in similar ways. This correlation is unsurprising, given that elderly care is inherently a 'people product' tied to social infrastructure. Regardless of wider economic shifts, demand for care services persists, and the sector continues to operate with relatively limited disruption in the long run.
Average Weekly Fees and Fee Growth
Average Weekly Fee growth (Indexed to Q1-2018 = 100)
UK Source: C&W Elderly Care Trading Database U.S. Source: NIC
U.S. and UK average occupancy across all asset classes
This combination of rising fees and stable occupancy presents a strong foundation for well-performing assets with high potential for healthy margins. For non-domestic investors, these factors play a crucial role in shaping investment decisions and should provide further incentive to lean toward investing in the UK care market.
Conclusions – Potential Consolidation and a Base for Strong Returns
Although pinpointing the exact reasons behind the significant growth of U.S. investment in UK care, especially over the last 18 months, is complex, we can make some educated assumptions. A key factor lies in the general composition of the two markets: the U.S. market has a clear inclination and well-trodden path toward consolidation, something the UK has yet to fully embrace. There remains a strong argument for consolidation in the UK and we've seen steps in this direction in the form of the large and small WholeCo transactions by U.S.-based investors in the past year or so. It’s certain that the consolidation project is far from compete in the UK, whether by operational buyers or PropCo investors.
The positivity is supported by strong trading KPIs in the UK market, with robust fee growth coupled with high, stable occupancy rates, creating an attractive environment for profitable margins. While many factors influence this, including a strong operator (brand identity, marketing, level of care, etc.) and quality real estate, diligent execution of consolidation can unlock significant upside.
One additional factor that hasn’t been discussed at length, but is still very important, is that U.S. investors tend to be much more knowledgeable and aware of the intricacies of the senior living / care home market. This is by virtue that the market in the U.S. is much more mature compared to the UK and other overseas counterparts. This gives U.S. investors the upper hand when it comes to experience and knowledge, as compared to other international investors.
Finally, it would be unjust to forego mentioning the current political environment, particularly in the U.S. The new Trump administration is likely to make changes, many of which will impact the care home market, and potentially impact overseas investment. However, it is far too early to draw any conclusions relating to the political landscape, one that seemingly is changing every day.
All being said, it’s unlikely - and not anticipated in the short to medium term - that the UK care market will mirror its U.S. counterpart. There are numerous factors that shape each market, including differing market dynamics, fundamental geography and variation in demographics, political influence, and an entirely different consumer base with distinct needs and expectations. However, the data points to the importance of U.S. investors in the UK care market and it wouldn’t be surprising to see this trend continue.
