New research from Knight Frank has revealed that investment in the UK’s purpose-built student accommodation (PBSA) sector reached £3.87bn in 2024, reflecting a 14% year-on-year increase from £3.39bn in 2023. Despite this growth, fourth-quarter investment fell short of expectations, with £575m committed during this period.
Growing investor interest despite regulatory hurdles
The increased investment highlights continued confidence in the PBSA market, even as transactions for stabilised assets face delays due to building safety regulations. “Deal times for stabilised assets are taking longer because of building safety regulations, which has pushed some transactions into early 2025. That said, overall activity was still robust,” said Merelina Sykes, joint head of student property at Knight Frank.
The report noted that 66 deals were completed in 2024, exceeding the five-year average of 57 transactions. Notably, nearly 50% of deals in the fourth quarter were for development sites, contributing to a record year for student land sales. Over the year, 22 development site transactions were finalised, representing a third of total deal volume.
Future outlook and ongoing transaction momentum
Investment activity is set to continue into 2025, with £1.3bn in transactions currently under offer. “The majority of deals under offer are for stabilised or portfolio deals, reflecting the opportunity investors see in upgrading and repositioning existing stock,” Sykes noted.
Holly Lush-Thornton of Knight Frank Research added: “PBSA developers have taken advantage of a quieter land market and softer pricing over the last 12 months, with some more traditional market participants having taken a ‘wait and see’ approach given challenges around viability and private sales demand.”
Student housing pipeline set to expand
Looking ahead, the total PBSA pipeline for 2025 is estimated to be just under 200,000 beds across the UK. Of these, 23% are currently under construction, while 48% have received full planning permission.
The demand for student housing continues to rise, and with significant investment pouring into the sector, landlords who act now may find themselves in a strong position to capitalise on future opportunities.
