PBSA investment soars to £3.9 billion – Knight Frank

The UK's purpose-built student accommodation (PBSA) sector attracted nearly £575 million in the final three months of 2024, bringing the yearly total to £3.87 billion, Knight Frank reveals.
This represents a 14% rise from 2023's £3.39 billion, and more than half of the investment is targeted at cities with large student populations.
Despite this growth, the real estate firm says that fourth-quarter investment fell short of expectations due to extended deal times for established properties.
The research reveals that deals are taking longer because of building safety regulations and some transactions were pushed into this year as a result.
PBSA beds being created
Last year saw almost 16,400 new PBSA beds being created across 63 projects, a 3% increase compared to 2023.
Nottingham led with 3,639 new beds, followed by London with 2,454 beds and Leeds with 1,874.
The joint head of student property at Knight Frank, Merelina Sykes, said: "The private sector continues to play the leading role in providing new accommodation for students, accounting for 81% of all new beds completed last year.
"Looking ahead, the largest concentrations of pipeline in terms of the absolute number of beds are found in cities with large student populations, such as London, Birmingham, Manchester and Nottingham, which together account for just under half of 2025's pipeline."
She added that PBSA activity is 'still robust'.
PBSA saw 66 completed deals
The 2024 PBSA market saw 66 completed deals, surpassing the five-year average of 57 - helped by a 'particularly liquid land market', Knight Frank says.
Research reveals that development sites made up almost half of all fourth-quarter transactions, culminating in a record year for student housing land sales.
There was a total of 22 such sales finalised throughout 2024, representing one-third of all deals.
Holly Lush-Thurston, of Knight Frank research, said: "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.
"Currently, the total pipeline for 2025 is just shy of 200,000 beds across the UK, with 23% of this under construction and a further 48% with full planning permission granted."
Market to gain momentum
Investment activity in the PBSA market is expected to gain momentum and Ms Sykes said: "Our team are tracking £1.3 billion of 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."
The firm's report says that last year, joint ventures and funding deals accounted for a fifth of the sector's deals by volume.
Lisa Attenborough, the head of debt advisory, said: "Interest rates are on their way down, and this will continue to have an impact on debt costs.
"Financial markets are betting on two cuts to the Base Rate in 2025.
"This should pave the way more accretive debt finance and enhanced returns."
Robust year for the PBSA sector
The managing director of Accommodation for Students, Simon Thompson, said: "2024 proved to be a robust year for the PBSA sector, with investment reaching £3.9 billion and a surge in land sales signalling strong developer confidence.
"Looking ahead, the pipeline for new beds is substantial, concentrated in major student hubs."
He added: "The deals also reflect the opportunity investors see in upgrading and repositioning existing stock to remain competitive.
"The continued demand for high-quality student housing offers promising prospects for landlords who can adapt and innovate."