Investment in the UK Purpose Built Student Accommodation (PBSA) sector reached £3.5 billion in 2024, marking a 13% increase from 2023, according to Savills.
Over the past five years, the sector’s annual investment volumes have averaged £4.9 billion, demonstrating its resilience despite ongoing market challenges.
The international real estate advisor believes that this, alongside improving investor sentiment, signals that the UK PBSA market has the ability to see greater liquidity volumes in 2025.
Lizzie Beagley, Head of UK PBSA & Co-Living Transactions, Savills Operational Capital Markets, said: “Despite a challenging year, the PBSA market remains resilient and a crucial component of the operational living investment market. 2025 is set to be an exciting year, with notable portfolio transactions and an increase in development funding and joint ventures expected.”
Savills research highlights the sector’s strength in 2024, despite challenges including visa delays, rising capital costs and a tough fundraising climate. Large scale land transactions demonstrated strong demand fundamentals including the sale of the 1,014-bed One Medlock scheme in Manchester, where Savills advised Dominus on its deal with Greystar, and Greystar’s acquisition of the 836-bed Triangle site in Selly Oak from Apsley Capital and Galliard.
The central London land market also performed strongly, highlighted by the sale of the 444-bed Kings Place to Unite and iQ/Blackstone’s acquisition of Blackfriars Crown Court, driven by sustained student demand and the appeal of London PBSA development. Regionally, resilience was evident in deals such as Savills advising Corebridge on the sale of assets in Bournemouth and Cardiff to Generation, supported by new capital partner, Goldman Sachs.
In 2024, traditional forward funding deals were limited, however, Savills advised on the acquisition of Gas Lane in Bristol for Hines from Watkin Jones. The year also saw a shift toward creative deal structuring, with a focus on joint ventures and preferred equity arrangements, such as the partnership at Grove Crescent, Stratford, with Housing Growth Partnership and Watkin Jones, along with several other transactions of this nature in the pipeline.
The availability of operational stock was limited, but demand remained strong, with notable interest in portfolios like Savills Project Sandpiper (Curlew).
Charlie Bottomley, Director, Savills Capital Advisors, Debt Advisory, added: “We continue to see strong demand from lenders to deploy capital into the PBSA sector, with both bank and non-bank capital actively seeking high-quality opportunities. Although underlying interest rates remain elevated, competition is exerting downward pressure on margins, and even mainstream bank lenders are becoming more flexible on leverage and covenant packages to secure prime financing opportunities.”
