In global property consultancy Knight Frank’s latest UK Student Housing Market Update for H1 2024, the company reveals that investment into the UK PBSA sector reached £2.45bn. This is much higher than the £1.1bn invested in H1 2023.
Q2 2024 marked the strongest quarter since 2022, with £1.7bn invested in the sector. This figure is inflated due to Mapletree’s acquisition of the Cuscaden Peak Portfolio, which includes 31 PBSA schemes across the UK and Germany. The UK assets are valued at approximately £960m.
Following a trend from previous years, regional assets continue to lead investment. Since 2019, on average, £2.1 bn has been invested annually in standalone regional assets.
This compares to an average annual spend of £570m on single assets in London over the same period. According to Knight Frank, the lower turnover in London reflects a lack of supply of PBSA opportunities, opposed to faltering demand.
“Robust investment in the first half of 2024 demonstrates the resilience and attractiveness of the UK student accommodation sector. Despite economic headwinds and pre-election market caution, investors recognise the compelling long-term value proposition of student accommodation, particularly in a market where demand continues to outstrip supply.”
Merelina Sykes, Joint Head of Student Property, Knight Frank
The total pipeline of student beds across the country now stands at approximately 160,000, with 22% currently under construction. An additional 49% – representing 78,000 beds – have secured full planning permission.
However, Knight Frank’s report highlights a constrained development pipeline despite the rise in investment seen so far this year.
For the 2024/25 academic year, less than 17,500 new PBSA beds are expected. This modest increase represents 0.6% growth compared to last year’s delivery – and it falls significantly short of pre-pandemic averages.
“With demand from students for housing high in a number of locations and supply not keeping pace, rental growth for the sector remains elevated, averaging 7.6% across the UK in 2024.”
Katie O’Neil, Head of Student Property Research, Knight Frank
According to Knight Frank, 258,000 new PBSA beds have been added to supply over the last decade. This accounts for 35% of total stock, so the 65% of existing PBSA supply in the UK was built pre-2012. For investors, this is both a challenge and an opportunity.
The research highlights that on one hand, a flight to quality for prime stock with strong ESG credentials has created a narrower and more competitive investment market. However, there are opportunities to drive value by retrofitting secondary PBSA stock, particularly in markets where the supply demand imbalance is most strong.
“The government’s acknowledgment of the sector’s financial challenges and its supportive stance are encouraging signs. The commitment to maintaining current visa structures is a positive outcome for the market.” Katie O’Neil, Head of Student Property Research, Knight Frank
Katie O’Neil, Head of Student Property Research, Knight Frank
