Investment into the UK purpose-built student accommodation sector has climbed to £1.7bn in the first half of this year.
According to data from BNP Paribas Real Estate H1 2024 investment saw an 245% increase against H1 2023 levels at £493m.
BNP PRE’s review of provisional RCA figures indicate that Q2 recorded £1.3bn of investment, which represents a 256% year-on-year change in quarterly volume from Q2 2023 at £358m.
Rebecca Shafran, alternative markets research director at BNP PRE, said: “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.”
Shafran said that there are shortfalls in stock across some key university cities alongside attractive pricing which can be tapped into.
She added: “Recent analysis has shown that despite falling applicants, the level of headroom in the UK student market is wide, with applications exceeding university capacity consistently over the past nine years, suggesting applications can fall without impacting student numbers.
“This is a positive signal for the continued strength of the market.”
Andrew Screen, head of residential capital markets at BNP PRE, 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 increased by £5bn in the last six months, with high demand for build-to-core and value add, mainly targeting London, prime regional cities, Russell Group and STEM university locations.”
Screen added: “Investors with allocations over £250m are focussed on multiple-development, programmatic joint ventures, or larger development opportunities.”
Photo © Hollandse Hoogte/Shutterstock
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