UK PBSA investment surged to £3.5 billion in 2024

Steve Lumley·24 January 2025·5 min read
UK PBSA investment surged to £3.5 billion in 2024

Investment in the UK's purpose-built student accommodation (PBSA) sector reached £3.5 billion in 2024 - a 13% increase compared to the previous year, Savills reveals.

The real estate firm says this robust performance underscores the sector's resilience, with average annual investment volumes exceeding £4.9 billion over the past five years.

Savills anticipates increased liquidity in the sector this year, driven by improving investor sentiment and a robust pipeline of transactions.

It adds that the sector demonstrated resilience last year despite challenges to the student accommodation sector such as visa delays , rising capital costs and a challenging fundraising environment.

PBSA market remains resilient

Lizzie Beagley, Savill's head of UK PBSA and co-living transactions, said: "Despite a challenging year, the PBSA market remains resilient and a crucial component of the operational living investment market.

"2025 is set to be an exciting year, with notable portfolio transactions and an increase in development funding and joint ventures expected."

Several significant land transactions last year underscored the strong underlying demand in the PBSA sector. These included:

· Manchester: The sale of the 1,014-bed One Medlock scheme to Greystar, where Savills advised Dominus

· Birmingham: Greystar's acquisition of the 836-bed Triangle site from Apsley Capital and Galliard.

Sustained student demand

Savills says that the central London land market also saw robust activity, driven by sustained student demand and the appeal of developing PBSA in the capital. Notable transactions included:

  • Kings Place: Sale of the 444-bed property to Unite
  • Blackfriars Crown Court: Acquisition by iQ/Blackstone.

Regionally, the market demonstrated resilience, as seen by Savills' advisory role in the sale of Corebridge assets in Bournemouth and Cardiff to Generation, supported by its new capital partner, Goldman Sachs.

While traditional funding deals were less prevalent, Savills also advised on the acquisition of Gas Lane in Bristol for Hines from Watkin Jones.

The year also witnessed a notable shift towards alternative deal structures, with increased emphasis on joint ventures and preferred equity arrangements.

The director of Savills Capital Advisors, Charlie Bottomley, said: "We continue to see strong demand from lenders to deploy capital into the PBSA sector, with both bank and non-bank capital actively seeking high-quality opportunities.

"Although underlying interest rates remain elevated, competition is exerting downward pressure on margins, and even mainstream bank lenders are becoming more flexible on leverage and covenant packages to secure prime financing opportunities."

Demand for student accommodation

The prediction from Savills chimes with a recent trading update from Unite Students which says that demand for student accommodation remains robust.

The provider also offers a positive outlook for student numbers in the 2025/26 academic year with growing domestic and overseas demand.

And, following the uncertainty caused by changes to student visa rules last year, a stable policy environment is encouraging more international student applications.

Currently, 66% of rooms within Unite's portfolio are reserved for the 2025/26 academic year - that's just below the 70% figure seen at this point in the last two years.

Unite's quarterly rental growth was 1% and yields remained stable at 4.5% over the quarter.

UK's student housing market

The managing director of Accommodation for Students, Simon Thompson, said: "The UK's student housing market continues to demonstrate strength despite a range of issues.

"This report from Savills shows that strong demand from both domestic and international students, coupled with ongoing investment from institutional investors, provides a positive outlook for the sector."

He added: "Student landlords still need to focus on providing high-quality, well-maintained accommodation with excellent amenities.

"By embracing a proactive and student-centric approach, landlords can navigate the challenges of the market and ensure the long-term success of their student property investments."