As we look forward into 2019, the focus on student accommodation has never been so acute and with several universities facing financial challenges, as well as the potential impact of the Augar Review on tuition fees, universities must ensure that they get their accommodation offering right.

James Pullan KnightFrank

We predict that there will be in excess of 29,000 additional purpose built student beds delivered next year, that’s similar to the population of Gibraltar. This uptick in delivery is a very significant contribution to the UK’s housing shortage, helping to ease the pressure on existing housing stock.

2018 saw a weight of Singaporean capital committing to UK student accommodation, with landmark deals including Singapore Press Holding’s acquisition of Unite’s Mayflower portfolio for £180m.

Overall the purpose built student accommodation (PBSA) sector looks set to reach a total combined value of over £53bn by the end of this year. North American and Asian investors are likely continue to dominate the UK PBSA market in 2019, with the strongest appetite for acquisitions coming from the US, Singapore and Hong Kong. But UK investors will continue to play a major role too - as illustrated by Arlington Advisors double acquisition of Merlin Heights in Leicester and the £232m Stellar Portfolio today.

Arlington Eclipse Stellar Portfolio

Arlington’s acquisition of assets including Eclipse in Cardiff as part of the Stellar Portfolio provided a strong start for PBSA deals in 2019

Despite Brexit, global investors continue to acquire PBSA assets in the UK, fundamentally underpinned by the UK’s world renowned higher education system. The asset class offers a stable income stream, with strong year-on-year rental growth prospects. When compared to more mature asset classes, such as the offices sector, PBSA is standing out and that looks set to continue into the new year.

Value of UK PBSA sector
2014 £30,900,000,000
2015 £39,200,000,000
2016 £42,500,000,000
2017 £45,800,000,000
2018 £50,500,000,000
2019 (predicted)
 £53,200,000,000

James Pullan, global head of student property at Knight Frank 

 

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