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Student accommodation

PBSA attracts £3.1bn of investment from buyers in 2016

Author: Staff





Knight Frank Student Property Report 2017 has shown that the purpose-built student accommodation (PBSA) market remained strong throughout 2016, which shows that investors continue to see value in the thriving market.

Knight Frank Student Property Report 2017

Following on from 2015, when more than £5 billion was invested in this branch of the property sector, 2016 was always going to struggle to live up to its predecessor. But even though it didn’t quite reach the heights of 2015, the £3.1 billion invested last year still represents a very strong 12 months for student property.

Knight Frank’s UK Student Housing Investment Update says that although it fell short of 2016, a lot of the money spent on PBSA in 2015 had come from a small number of exceptionally high value deals from new property market investors.

In 2016, on the other hand, there was more of a mix of the growth of existing portfolios and new acquisitions, with a 40/60 split in favour of the latter. So even though less was invested than in the year before, it was an indicator that the market remains strong and the value therein is still evident, driven by tenant demand and growing student numbers.

Data also shows that there was an increase in 2016 in terms of the number of investors from other nations who were spending big on student property. Each of the five most expensive deals of the year, Knight Frank said, came from overseas purchasers, with a combined investment from this demographic of £1.49 billion throughout the year.

Looking forward, this is a trend Knight Frank expects to continue in 2017, saying that institutional buyers from overseas are likely to “dominate” the market and spend even more in the months ahead.

And in terms of regional investment, although London once again came out on top in 2016, there were some surprisingly strong performing areas. Scotland came second overall for the year, with more than £300 million of investment, while other areas such as south-east, West Midlands and Northern Ireland also performed very well.

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