New research from property consultancy Knight Frank reveals that nearly £575 million was invested in the UK purpose-built student accommodation (PBSA) market in the final quarter of 2024, bringing total annual investment to £3.87 billion—a 14% increase from £3.39 billion in 2023.

While investment levels indicate the sector’s strong appeal, fourth-quarter volumes were lower than expected. Merelina Sykes, Joint Head of Student Property at Knight Frank, attributes this to delays in transaction timelines due to building safety regulations, which pushed some deals into early 2025. Nevertheless, overall activity remained robust, with 66 deals completed in 2024—exceeding the five-year average of 57 transactions.

Development Market Leads the Way

With limited standing stock available, the market saw high liquidity in land transactions. Nearly 50% of fourth-quarter deals involved development sites, capping a record year for student land sales. In total, 22 development site sales took place, accounting for a third of the year’s total transaction volume.

Holly Lush-Thornton of Knight Frank notes that PBSA developers capitalised on softer pricing in a quieter land market, while some traditional investors adopted a ‘wait and see’ approach due to challenges around viability and private sales demand.

Investment Outlook for 2025

Investment momentum is expected to grow. Sykes reports that £1.3 billion in transactions are currently under offer, mostly for stabilised or portfolio deals, reflecting investor interest in upgrading and repositioning existing stock.

Additionally, falling interest rates are set to impact debt financing. Lisa Attenborough, Head of Debt Advisory at Knight Frank, predicts that financial markets will see two Base Rate cuts in 2025, paving the way for more cost-effective debt financing and improved returns.

PBSA Supply and Future Pipeline

In 2024, 16,400 new PBSA beds were delivered across 63 schemes, a 3% increase from 2023. Nottingham led the way with 3,639 new beds, followed by London (2,454) and Leeds (1,874).

Looking ahead, nearly 200,000 PBSA beds are in the pipeline for 2025, with 23% under construction and 48% granted full planning permission. Cities with large student populations—including London, Birmingham, Manchester, and Nottingham—account for almost half of 2025’s pipeline.

The private sector remains dominant, delivering 81% of new student beds last year, and continues to drive future accommodation supply.