Investment in UK student property topped £3 billion in 2016, more than double the levels seen in 2013 in 2014.
New figures from Knight Frank reveal that investment in the purpose-built student accommodation sector hit £3.1 billion in 2016, down from the record £5.1 billion in 2015, but significantly higher than the preceding.
Indeed, the data demonstrates that demand PBSA remains strong, with new investors continuing to enter the sector. Much of 2016’s activity was a result of the continued trend for portfolio acquisitions. The data shows that portfolios represented around 60 per cent of the deals concluded in 2016. 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.
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 per cent of total investment. Private equity firms accounted for 24 per cent of the total spend, with institutional investment marking up a further 12 per cent. REITs, such as GCP Student Living and Empiric Student Property, were also active over the course of the year following on from a busy 2015, driving just around £325m of investment, mainly for single asset deals.
“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,” says James Pullan, Head of Student Property for Knight Frank.