UK: Knight Frank’s latest UK Student Housing Market Update shows that 21 transactions with a combined value of nearly £750 million were completed in Q1 2024.
This figure is up significantly on Q1 2023’s £148 million, but down compared with the bumper starts to the year recorded in 2021 and 2022.
It is also down on Q3 2023 when £1.27 billion worth of UK PBSA assets were traded. Full year investment volumes for 2023 were £3.35 billion
Knight Frank says investors continue to view the PBSA sector favourably due to its strong fundamentals, counter-cyclical features, and the prospect of attractive risk-adjusted returns.
Merelina Sykes, joint head of student property at Knight Frank, said: “The UK student accommodation sector demonstrated its resilience in the first quarter, attracting significant investment despite the broader economic headwinds. While total deal volumes are down compared to recent years’ peaks, the sector’s strong performance reflects investors’ confidence in its long-term prospects.”
The company says London has the largest pipeline of around 26,000 student beds either under construction or with planning granted. Other large markets include Manchester (10,500), Bristol (8,700), and Nottingham (7,600).
The report highlights that politics and policy will play an important role in the PBSA sector’s performance over the next year or so. Katie O’Neill, head of student property research at Knight Frank, said: “With money markets betting on two interest rate cuts in 2024, any improvements on the debt environment will boost transactional activity, but the focal point this year for the PBSA market will be on politics and policy. Heightened by the lead-up to a general election, Q1 saw restrictions to the student visa route come into effect.
“However, it is important that policymakers do not conflate student visas with actual student numbers, with many students securing visas for multiple countries. Without a greater understanding of this and the economic benefits international students bring, there is a real risk of an over-correction, which ultimately has knock-on effects for the financial health of the UK’s Higher Education Sector, she added.
