by Oliver Knight
Demand from new and existing investors meant that 2016 was another strong year for the sector.
Some £3.1 billion was invested in the UK Purpose Built Student Accommodation (PBSA) market in 2016, according to a new report from Knight Frank’s Student Property team.
This figure was more than double the levels seen in 2013 and 2014, the report said.
James Pullan, Head of Student Property at Knight Frank noted that whilst total spend last year was lower than the record of £5.1bn seen in 2015, it demonstrated that demand for PBSA remains strong. Investment in 2015 was augmented by a number of exceptional deals on large portfolios made by new entrants to the market, he added.
Much of the activity last year was as a result of the continued trend for portfolio acquisitions. The data shows that, of the deals concluded in 2016, portfolios represented around 60% of the total.
The biggest single transaction was by Singaporean real estate fund Mapletree which made its first foray into the sector following its acquisition of the Ardent Portfolio for £417m.
Other key transactions in 2016 included Brookfield Property Partner’s acquisition of The Rose Portfolio and Global Student Accommodation’s purchase of the ThreeSixty Portfolio (formerly Knightsbridge). Notably all of the five largest deals were done by overseas investors with a combined £1.49bn of investment.
Funds were the most active investors in the sector over the course of the year investing around £1.4bn on 20 transactions, a figure which accounted for 47% of total investment. Private equity firms accounted for 24% of the total spend, with institutional investment marking up a further 12%.
“We expect the market will increasingly be driven by the REITs and pension funds as economies of scale assist these institutional buyers to create increasingly large portfolios with efficiencies of operation, branding and marketing”
