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  • Writer's pictureJustin Bishop

PBSA; 'Top of the class' for RE investors?



The last fortnight, coinciding with many parents packing up and dropping their teenage offspring to university for the first time, we’ve noted an increase in news and articles on the PBSA theme.


Unlike a teary empty nester, it seems the student accommodation sector remains remarkably resilient.


With many key university towns and cities across the UK suffering from a a lack of standing stock and tight and diverse planning regimes, the market remains an attractive and compelling opportunity to investors, with a risk appetite.


Some examples of recent first forays into this sector include Harbert Management Corporation, who recently acquired the Skyfall portfolio, a £150m collection of PBSA assets from Starwood and Roundhill, and is their first purely PBSA acquisition in Europe, having typically previously focused on logistics, offices and residential.


Additionally, September saw announced a new JV between private equity firm Q Investment Partners and London-based Hurlington Capital to develop an £80m student accommodation site in Woolwich – with a number of universities in its vicinity – and their first entry each into the London PBSA market.


Also this month, Unite Students announced £95m Glasgow development as a strategic response to the city’s pressing student housing deficit. Unite has maintained momentum in its development pipeline, with other PBSA projects boasting 5,600 beds in top university cities including Nottingham, Bristol and Glasgow.


Elsewhere in Europe Knight Frank’s Ireland Student Housing Market report found a woeful lack of student accommodation in Ireland where development has not kept pace with growing student population leading to increased opportunity for investors to target funding and development deals.


Tim MacMahon, Knight Frank Ireland’s director and head of residential capital markets, “Given the supply and demand dynamics, we expect PBSA investment to be a key target for investors.”


Whilst supply chain issues are leading to price rises in steel, timber, labour, and insurance premiums have contributed to an increase in build costs – overall the positive outweigh the negative in the sector.


Figures for the UK in the latest annual student accommodation report by Cushman & Wakefield found that Student rents have risen by 8.02% for the 2023/24 academic year due to student-bed ratio at 2.12 university students for every available bed, rising to 2.52 in London.


David Feeney, partner at Cushman & Wakefield’s student accommodation team states, “While student housing remains attractive relative to other property sectors, investors will need to closely evaluate market dynamics…. Cities like London, Nottingham, and Bristol continue to dominate development pipelines. But with affordability issues acute, some secondary markets offer opportunity.”


Daniel Smith, a PBSA, Sustainability & ESG Consultant, concurs. Speaking at the end of September at the Operational Real Estate (OPRE) Festival in London to a room filled with investors, operators and developers, he said the data shows that not only is there an increase in students heading to third level education, there’s less beds being built to accommodate them, the sector remains resilient to recessions and geopolitical events, simplified operations with long term tenancies and low marketing costs and stellar returns.


Smith concluded, “Data, trends and the state of the sector paint an extremely positive story for PBSA. Quite simply, why wouldn’t you invest in PBSA?”





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