UK PBSA yearly investment hits £3.3bn in Q3

The UK purpose-built student accommodation sector saw investment for 2024 reach £3.3bn – significantly more than the £2bn recorded at the same point last year. However, according to the latest data from Knight Frank, £840m was invested across 15 deals in Q3 2024 – down 9% compared to the same period last year, which saw £923m investment.   Despite a healthy flow of capital invested into UK PBSA so far this year, 30% is associated with just one deal – Singapore-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 £25m-£50m category accounting for 24%. Additionally, the agency said that the UK PBSA market remains an attractive asset class, with the UK accounting for 46% of global capital flows into PBSA worldwide. 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. 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. In total, funding deals and joint ventures accounted for just 11 of the 52 deals in the year to date. Katie O’Neill, head of PBSA research at Knight Frank, said: “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.” Merelina Sykes, joint head of student property at Knight Frank, said: “While we are seeing robust activity, it’s important to note that transaction completion timeframes have extended, reflecting the complex economic landscape we are navigating.” Photo © Hollandse Hoogte/Shutterstock