Investment in the UK purpose-build student accommodation (PBSA) sector reached £2.45bn in the first half of 2024 – more than double the £1.1bn invested in H1 2023, according to the latest data from Knight Frank.
The company’s UK Student Housing Market Update recorded investment of more than £1.7bn in Q2 20224 making it the strongest quarter since 2022. The Q2 figure was inflated by Mapletree’s acquisition of the Cuscaden Peak Portfolio, with the UK assets valued at approximately £960m.
Regional assets continue to lead investment activity with £2.1bn invested annually in standalone regional assets on average since 2019 compared with an average annual spend of £570m on single assets in London over the same period.
Knight Frank said the lower turnover in London reflected a lack of supply of PBSA opportunities in the capital. The company added the UK’s PBSA development pipeline remains constrained, with fewer than 17,500 new PBSA beds expected to be added in the 2024/25 academic year – a 0.6% increase on last year’s delivery, but significantly short of pre-pandemic averages.
Merelina Sykes, joint head of student property at Knight Frank, said: “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.”
Katie O’Neil, head of student property research at Knight Frank, added: “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. 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.”
