Knight Frank has released its latest figures on investment into the UK’s purpose-built student accommodation (PBSA) market. The findings reveal robust PBSA investment activity despite the ongoing challenging investment backdrop.
In Q3 2024, £840m was invested across 15 deals, surpassing the ten year quarterly average of £700m. Total PBSA investment for 2024 has reached £3.3bn, which is significantly more than the £2bn recorded at the same point last year.
Despite a healthy flow of capital invested into UK PBSA so far this year, 30% is associated with just one deal – Singaporean-based Mapletree’s acquisition of the Cuscaden Peak Portfolio.
Almost half of deals in 2024 were for lot sizes valued up to £25m. This was followed by deals in the £50m to £25m category – accounting for 24%.
The UK PBSA market remains an attractive asset class with the UK accounting for 46% of global capital flows into PBSA worldwide, according to Knight Frank.
In the UK, overseas investors accounted for 22% of UK deals in 2021; this figure jumped significantly in 2022 to 41%. By 2023, 46% of deals were conducted by overseas investors.
“The global strength of the UK market is evident in its dominant share of global PBSA investment. This trend, coupled with a record number of land acquisitions, indicates that investors are actively seeking diverse entry points into this attractive sector.
“Historically, stabilised PBSA assets have been the most appealing for investors when looking to get a foothold in the UK market. But given the finite opportunity of standing stock acquisitions, alternative pathways to deploying dry powder are strengthening.”
Katie O’Neill, Head of PBSA Research, Knight Frank
Land acquisitions are the highest they have ever been annually at 18 site sales over the nine months in 2024. While investors continue to seek exposure to the market, the wider macro-economic picture continues to put pressure on deal structuring.
Knight Frank highlights that in total, funding deals and joint ventures accounted for 11 of the 52 deals in the year to date.
“The UK PBSA market continues to demonstrate its resilience and appeal to investors, with investment volumes comfortably exceeding the long-term average. While we’re seeing robust activity, it’s important to note that transaction completion timeframes have extended, reflecting the complex economic landscape we’re navigating.”
Merelina Sykes, Joint Head of Student Property, Knight Frank
This research follows Knight Frank’s report, released last month, which revealed that student renter preferences are shifting. A significant 65% of first-time university applicants said the availability of suitable accommodation influenced their choice of institution.
