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UK: Unite said that growing construction and regulatory costs have stalled PBSA development across the country.
In its yearly report, Unite Students said that PBSA delivery is down 50 per cent from pre-pandemic levels. It claimed that drop can be attributed to viability challenges from “higher costs of construction and funding, as well as the time required to secure planning and Building Safety Regulator (BSR) approvals.”
Unite has pulled out of ventures due to viability questions recently. Previously, the firm dropped a planned 600-bed Paddington joint venture with Travis Perkins for a £10 million hit, and Tuesday saw it sell the 571-bed St Pancras Way PBSA.
Sold to Unite UK Student Accommodation Fund (USAF) for £186 million, Unite will take one per cent less than the December asking price for the University College London-contracted development.
“The disposal of St Pancras Way is part of the group’s strategy to accelerate disposals to £300m to £400m per annum,” Unite chief Joe Lister said. “The sale to USAF means we remain invested in a high quality London asset, while enhancing management fee income and releasing capital for reinvestment into higher-returning opportunities in accordance with our capital allocation priorities.”
PBSA development pipelines have been affected by the Government’s Planning and Infrastructure Bill 2025 since its introduction last March.
Highlights:
- Unite Students’ annual report indicates PBSA delivery has fallen 50 per cent below pre-pandemic levels, attributed to viability challenges from higher construction costs, funding costs and extended timelines for planning and Building Safety Regulator approvals.
- The company recently sold the 571-bed St Pancras Way property in London to the Unite UK Student Accommodation Fund for £186 million, receiving 1 per cent less than the December asking price for the University College London-contracted development.
- Unite previously withdrew from a planned 600-bed Paddington joint venture with Travis Perkins, taking a £10 million write-off on planning costs due to viability concerns.
- Chief executive Joe Lister stated the St Pancras disposal aligns with the group’s strategy to accelerate capital recycling, targeting £300-400 million in annual disposals to reinvest in higher-returning opportunities.
- The Planning and Infrastructure Bill 2025, introduced in March of that year, has affected PBSA development pipelines through new regulatory requirements and approval processes.
