PBSA investment rose to £1.7 billion in first half of 2024

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The H1 2024 figures marks a 245% increase against H1 2023 levels at £493 million

Investment into the UK purpose-built student accommodation (PBSA) sector has jumped to £1.7 billion in the first half of this year, according to a new analysis of preliminary data by BNP Paribas Real Estate.

The firm’s review of provisional RCA figures indicate that of the £1.7 billion total, Q2 recorded £1.3 billion of investment, which represents a 256% year-on-year change in quarterly volume from Q2 2023 at £358 million. The H1 2024 figures marks a 245% rise against H1 2023 levels at £493 million.

Rebecca Shafran, alternative markets research at BNP Paribas Real Estate, noted: Student accommodation really is the darling of the alternatives sector at the moment and is set to outweigh other living asset classes over the next 12 months. It offers a long-income play with strong operational performance and a track record which investors in the beds sector really value. We are seeing shortfalls in stock across some key university cities besides attractive pricing which can be tapped into.

Recent analysis has shown that despite falling applicants, the level of headroom in the UK student market is wide with applications surpassing university capacity consistently over the last nine years, indicating applications can fall without impacting student numbers. This is a positive signal for the continued strength of the market, she added.

Andrew Screen, head of residential capital markets at BNP Paribas Real Estate, said: There is an unprecedented amount of capital targeting the UK living sector at the moment and student is the primary target. Investor funding allocations for PBSA have risen by around £5 billion in the past six months, with high demand for Build-to-Core and Value Add, mainly targeting London, prime regional cities, Russell Group and STEM university locations.

We have also seen a rise in demand for first gen refurbishment opportunities and expect to see Core portfolio transactions commencing towards the end of the year. Investors with allocations over £250 million are focussed on multiple-development, programmatic JVs or larger development opportunities, he said.

Lindsey Lock, student accommodation valuations at BNP Paribas Real Estate, said: The second half of this year should bring clarity on occupancy, and with the general election, improved political stability. In the meantime, investors are waiting in the wings as we approach the beginning of a new academic year to sustain their confidence in the sector.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Getting Money Wise. The information provided on Getting Money Wise is intended for informational purposes only. Getting Money Wise is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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