Business Outlook 2026 | Capital Markets
Investor appetite for operational real estate in 2025 has been strong, particularly in UK healthcare where the sector achieved a record year.
Overview
With the economic and geopolitical landscape being mixed during 2025, operational real estate has become a key area of focus for a wide variety of investors who are increasingly focusing on the needs-driven living sectors, which are underpinned by long-term demand and demographics. We expect these trends to continue in 2026 as investment strategies evolve with more investors looking to deploy capital into operational real estate versus traditional asset classes.
Investor sentiment during 2025 was mixed, although it was a year of significant activity and evolution, particularly in healthcare. At the sharper end of the yield spectrum, institutional investors were very selective in their acquisition requirements, preferring a more passive approach as the year progressed. This caution has been largely driven by the wider economic environment and fluctuations in risk-free rates (government gilts) and stubbornly high levels of inflation highlighted by the 10-year gilt reaching close to 5% at the start of 2025 and settling in the mid-fours for much of the year.
With this backdrop, institutional investors who traditionally operate at the sharper end of the yield spectrum have been very selective in their investment approach. Most of the activity in the UK market has been when yields have reached 6%/7%+ where finance costs are accretive. At these levels, we have seen high levels of demand from UK, European and US REITs, family offices, European and International institutional investors and private and high-net-worth individuals.
Michael Hodges
Managing Director - Capital Markets
Which of Christie & Co’s ‘Living’ Sectors have seen the greatest level of activity?
UK healthcare has been a standout sector, with 2025 being a record year for investment volume, which is likely to be north of £12 billion by the end of 2026. This has been fuelled by significant investment from US REITS led by Welltower, which concluded a series of mega transactions in Q4, including Barchester Healthcare for circa £5.2 billion and HC-One for £1.2 billion. These and other transactions have been undertaken using management contract/ RIDEA structures, in comparison to the more traditional FRI/ triple net structures seen in the UK market.
Within the healthcare sector, we have also seen M&A or merger activity between a number of REITS. These include the US REIT, Care Trust, acquiring Care REIT (formerly Impact) and Aedifica and Cofinimmo, two major European REITS agreeing on a merger. In the primary care space, Primary Health Properties successfully acquired Assura. These deals should be positive for market activity in 2026.
In contrast, the UK hotel market came into 2025 off the back of a very strong 2024, with deal volumes of just under £7 billion, anchored by significant portfolio transactions. In 2025, the absence of large portfolio deals led to a much lower headline figure despite strong single-asset activity. Whilst US investor activity has been dominant in healthcare, it has softened in hotels, with a notable uptick in activity from domestic investors. A good level of liquidity remains in the market, and there are a number of reasons for optimism in 2026.
What about Christie & Co’s other sectors?
In 2025, we notably stepped up our investment activity in the volume end of the market across childcare, medical and retail/ leisure. In comparison to hotels and healthcare, lot sizes are smaller - typically in the range of £500,000 to £5 million. Buyers include funds/institutional capital for modern assets, let to the strongest covenants, together with a large number of private investors and entrepreneurs, many of whom are operators within Christie & Co’s sectors.
We were particularly active in brokering investment deals within the early years childcare and medical sectors during 2025, where there is strong demand from a wide range of buyers, particularly in the 7% to 10% yield spectrum. We expect this to continue in 2026 with a number of new projects in the pipeline.
Case Studies
We were involved in a number of high-profile real estate investment projects in 2025, including:
Omega’s acquisition of the remaining Four Seasons portfolio
We were pleased to advise Omega on its acquisition of a portfolio of care homes previously operated by Four Seasons Health Care Group (FSHCG). The acquisition completed in April 2025.
Omega acquired 45 care homes located in the UK and Jersey, which were simultaneously leased to six operating partners under triple-net (FRI) leases, including Gold Care Homes, Harbour Healthcare, SpringCare, Belmont Healthcare, and Jersey-based LV Care Group. Two additional homes were acquired freehold by Gold Care Homes with the transactions collectively representing the entirety of FSHCG’s remaining portfolio.
As a US-based group, Omega approached the FSHCG deal in line with its existing investment in UK care homes, which further diversify its asset classes and funding streams.
The remainder of the portfolio was sold off a valuation of £241,750,000.
Sale of the Vienna Marriott
We were exclusively instructed by CPI Europe to advise on and broker the sale of the freehold investment of the iconic hotel property. This was a complex project due to condominium ownership and non-hotel-related uses, such as office and retail.
The sale of the 328-room asset was announced in June 2025, with the buyer being a consortium of international investors. The deal represented one of the most significant hotel transactions in Central and Northern Europe in recent years.
Outlook for 2026
Looking ahead to 2026, we are optimistic about the outlook for the next 12 months. The visibility and pipeline of transactions scheduled to happen in the first half of the year are ahead of the same period a year ago.
There is no doubt that increasing costs will continue to put a strain on businesses, and the economic environment will be more challenging in the year ahead.
As long as demand remains at the current level, with bank funding readily available, then we see no reason why activity shouldn’t be maintained and even surpass the levels seen in 2025.
Whilst there are some macroeconomic and geopolitical factors to navigate around, we are positive about the prospects for the year ahead. Summarised below are our key predictions:
- OPRE will continue to be a key area of focus for institutional investors, and we expect to see more capital looking to deploy across the sectors which represent Christie & Co’s core markets.
- Whilst the 'mega deals' seen in the UK healthcare sector this year will be hard to replicate, we expect to see good demand from an increasing range of capital for sale and leaseback or manage back type deals involving good quality mid-market stock and strong regional operators.
- We expect to see increased focus and investor activity in continental Europe, particularly within the 'living' sectors of hotels and healthcare.
- Strong demand will remain for good quality investment opportunities in the £500,000 to £5 million segment of Christie & Co’s core markets.
- The focus on sustainable investment/ESG will continue to evolve.