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Investment in UK student housing climbs 245 per cent to record high

Greystar student housing
Greystar student housing

Investment in the UK’s purpose-built student accommodation (PBSA) sector soared to £1.7bn during the first half of the year, according to BNP Paribas, in yet another sign of the real estate class’s eye-popping growth.

The figure represents a massive 245 per cent increase on the amount of capital that went into the sector in the same period last year.

The second quarter – when £1.3bn was ploughed into the sector – saw particularly blockbuster growth; a 256 per cent year-on-year increase.

Rebecca Shafran, alternatives markets research at BNP Paribas Real Estate, 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. 

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“It offers a long-income play with strong operational performance and a track record which investors in the beds sector really value. We’re seeing shortfalls in stock across some key university cities alongside attractive pricing which can be tapped into.”

PBSA has been one of the best performing asset classes in a corporate real estate industry that has struggled to adapt to the higher rate environment of the last two years.

Student numbers are at record highs, and with a Labour government likely to take a “less hostile” stance on international students, demand is likely to continue to outstrip supply.

Lindsey Lock, student housing valuations at BNP Paribas Real Estate added: “The second half of this year should bring clarity on occupancy, and with the general election, improved political stability. In the meantime, investors are waiting in the wings as we approach the start of a new academic year to sustain their confidence in the sector.

“With a flow of transactions coming through, we should see an increase in the volume of secured lending valuation required by funders and lenders.”