Hospitals
With the healthcare system already under intense strain at the start of 2026, the hospital sector is positioning itself for what looks to be another transformational year. The NHS waiting list remains at approximately 7.4 million people, with no signs of a meaningful reduction as the year begins. Against this backdrop, private healthcare is not only becoming a more attractive alternative for patients, especially younger adults according to CIL Strategy Consultants, but also an increasingly strategic space for investors seeking resilient, long-term growth.
One of the clearest signals of this is the continued enthusiasm from insurance-linked investors, who remain highly active. With NHS backlogs persisting, insured patients are increasingly turning to private hospitals for faster and more efficient diagnosis and treatment. LaingBuisson reports that insured healthcare activity peaked in Q4 2025, with roughly 3 million invoices processed, up 5% year-on-year, illustrating the rising utilisation of private hospitals and outpatient services by PMI members. If public-sector delays continue, insurance capital will see private hospitals as stable, counter-cyclical, and essential infrastructure.
This year is also expected to feature several large hospital portfolios coming to market or launching processes during Q1. After a prolonged period of subdued supply, 2026 marks a moment when owners, particularly investor-backed platforms, are reconsidering strategic options amid rising valuations and strong buyer interest. Market sentiment suggests that multiple platforms are preparing to test the market and given the increased presence of both domestic and overseas capital in late 2025, competitive tension is likely to be high as these portfolios emerge.
Perhaps the most prominent storyline in early 2026 is Spire Healthcare’s strategic review and exploration of strategic options, with a mid-January deadline initially set for expressions of interest. While Bridgepoint Advisers Limited and Triton Investment Advisers had been viewed as leading potential suitors, both firms have since confirmed that they do not intend to make an offer. Spire has stated that it remains in discussions with other parties and is continuing to evaluate alternative actions to drive long-term shareholder value. Notwithstanding the near-term uncertainty, the process underscores a broader theme we expect to persist through 2026: sustained private capital interest in the hospital sector, driven by the growing convergence of clinical services, data, and technology.
Performance across the hospital segment remains strong heading into 2026. The most notable example is Narayana’s acquisition of Practice Plus Group (PPG), which has significant potential
to reduce pressure on the NHS list by expanding PPG’s already extensive base of NHS-contracted activity. Similarly, Nuffield Health’s decision to return leases on two Barts Health Group sites reinforces a strategic reallocation of care capacity that may indirectly support NHS throughput by strengthening alignment between public and private-sector service provision. Both moves reflect a broader recalibration of how different operators, domestic and international, intend to position themselves within a mixed-economy healthcare model.
Activity trends at the end of 2025 provide further clues about the direction of travel in 2026. Outpatient and non-hospital activity saw year-on-year increases of 5.8% and 8% respectively in Q4 2025, while admitted care volumes declined by 2.9%. This divergence suggests a structural rebalance is underway: a shift away from exposure to heavy inpatient portfolios and toward outpatient, diagnostic, and ambulatory-care platforms. With technology enabling earlier intervention, same-day treatment, and virtual follow-up, and with insurers increasingly incentivising cost-efficient pathways, investors are expected to favour hospital groups with strong outpatient footprints or diversified service lines beyond traditional acute wards.
The hospital sector enters 2026 in a period of active consolidation and shifting care models, driven by persistent NHS backlogs and rising private-payer demand. Insurance capital remains highly engaged as patients increasingly turn to private providers for faster access. Major platforms are preparing transactions, and private equity interest is accelerating, attracted by hospitals’ scalability and growing role in data-driven, digitally enabled healthcare. Operators are simultaneously strengthening NHS partnerships and adapting to a clear shift toward lower-acuity outpatient and diagnostic pathways. Together, these forces position 2026 as a pivotal year defined by backlog-driven demand, innovation-led care delivery, and strong investor appetite for scalable hospital platforms.
Primary care
The UK primary care property market is entering a phase of measured transition. Rather than the expansionary momentum seen in previous years, the sector is now characterised by strategic refinement, cautious capital deployment, and a renewed focus on long term resilience. Even so, primary care remains one of the most stable and sought after real estate segments, supported by essential service demand - with GP appointment volumes reaching record highs in 2025 - and government backed income streams.
Last year’s headline event, the PHP–Assura merger, set the stage for significant structural change. With PHP emphasising that the combination will create a materially larger platform with enhanced scale, reduced cost of capital and meaningful synergy potential, 2026 is expected to mark a shift toward integration rather than expansion. As PHP brings the enlarged portfolio together, the focus is likely to fall on operational efficiency and disciplined balance sheet management in line with its stated strategy. For the wider market, this may translate into selective activity rather than broad transactional volume, with any asset recycling emerging in measured, strategic phases as PHP concentrates on realising the benefits of the newly combined estate.
Investor sentiment entering 2026 remains positive but noticeably more selective. Institutional players such as Newcore Capital Management, which has committed to deploying £100m of equity over the next 18 months, continue to view the sector as a stable long income opportunity. Longmead Capital also remains active, identifying opportunities in a market temporarily constrained by cost pressures. BlackRock, having recapitalised, is re-entering with discipline, focusing only on the most compelling assets. Across the board, investors are increasingly prioritising income security and asset quality. The NHS backed nature of primary care leases continues to provide a highly attractive risk profile, especially at a time when other property sectors struggle with vacancy and structural change. The new 2025/26 GP contract delivers a £969m investment uplift, including £889m in core contract funding and £80m to support GP–consultant advice and guidance, representing the largest increase in general practice funding in over a decade. While this uplift is primarily aimed at stabilising practice finances and workforce capacity, it also reinforces the long-term security of NHS backed income streams, providing an additional layer of confidence for investors assessing primary care assets in 2026.
In the transactions market, although 2025 saw large-scale deals such as EssilorLuxottica’s acquisition of Optegra and the PHP-Assura merger, 2026 is expected to be dominated by smaller deals. Elevated financing costs and yield shifts mean large scale acquisitions are harder to justify, pushing investors toward single asset and micro portfolio transactions. This shift is also creating an unexpected opening for first time buyers. As some large funds step back from marginal opportunities, new entrants, operating with lower capital requirements and more flexible return expectations, are finding space to enter the market. The result is a more diverse buyer landscape, with established institutional capital coexisting alongside emerging participants.
Development, however, will remain challenging. Persistent construction inflation, coupled with increased energy costs, higher borrowing costs, and continued uncertainty in the pharmacy sector, an important cotenant and anchor use in many schemes, make new primary care developments difficult to underwrite. Funding ambiguities and cost volatility continue to dampen developer appetite, particularly for larger or more complex projects. Yet necessity still drives opportunity. GP practices facing outdated or undersized premises continue to require modern facilities, and in certain high growth areas the need for new infrastructure is unavoidable. This environment may benefit smaller or first-time developers able to adopt leaner models and work closely with practices to deliver viable, purpose-built schemes.
At the same time, demographic growth is intensifying pressure on existing GP estates, with many practices now operating beyond their desired patient capacity. This rising strain is reflected in LaingBuisson’s finding that more than seven in ten people say they would consider using private healthcare, up almost 10% in two years. Against this backdrop, rising demand pressures and continued access challenges in NHS general practice are expected to drive more patients toward private GP and primary care adjacent services over the coming year. Growth in the independent sector’s lower cost, lower complexity clinics will make private options more accessible and appealing, particularly for timely appointments and diagnostics. As a result, primary care is likely to see a steady expansion of self-pay activity, reinforcing the shift towards a mixed public–private model.
Despite yield pressures, the sector continues to benefit from its government backed, long lease income structure. With UK 10-year gilt rates elevated and volatile, funding costs remain high, and property yields have softened. The security and duration of NHS leases continue to anchor investor confidence, preventing the more dramatic repricing seen in commercial sectors such as offices or retail.
Ultimately, 2026 is shaping up to be a year of strategic opportunity rather than aggressive expansion. Portfolio optimisation, disciplined capital deployment and cautious development will define the market, but the underlying fundamentals remain exceptionally strong. Importantly, selective new openings continue to signal sustained demand for frontline healthcare services. Spire Healthcare’s recent launch of a private clinic in Southwest London demonstrates the growing role of independent providers within the primary care ecosystem. Primary care’s essential role in the healthcare system, combined with its stable income profile and long-term government backing, ensures the sector will continue to attract serious capital. For investors, developers and new entrants who are willing to navigate the nuances of the current environment, 2026 may prove to be a particularly rewarding year.
