"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."
- Holly Lush-Thurston - Knight Frank
According to new research published by Knight Frank, annual investment rose 14% in 2024, with year-on-year volumes rising from £3.39bn in 2023.
While a pick-up in investment demonstrates the attractiveness of the PBSA market, volumes were less than anticipated in the fourth quarter.
Merelina Sykes, Joint Head of Student Property at Knight Frank commented: “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.” According to Knight Frank, 66 deals completed in 2024, putting the year comfortably above the five-year average of 57 transactions.
With a lack of standing stock available in 2024, the year’s transaction landscape was defined by a particularly liquid land market. Nearly 50% of deals completing in the fourth quarter were development sites, capping a record year for student land sales. Overall, 22 development site sales were completed over the course of the year, accounting for a third of deal volumes.
Holly Lush-Thurston, 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.”
Investment momentum looks set to build in the year ahead. Merelina Sykes noted: “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.”
Lisa Attenborough, Head of Debt Advisory at Knight Frank, commented: “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 for more accretive debt finance and enhanced returns.” In total, funding deals and joint ventures accounted for a fifth of deals by volume last year.
Almost 16,400 new PBSA beds were delivered across 63 schemes in 2024, representing a 3% increase in bed spaces delivered compared with the previous year. Nottingham saw the highest level of new delivery with 3,639 beds added to supply, followed by London (2,454), and Leeds (1,874).
Holly Lush-Thurston added: “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.”
“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,” concluded Merelina Sykes. “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.”
