Financiers allocate 1 billion euros to bolster UK’S student housing market

The UK student accommodation market is seeing an influx of capital as lenders pour €1 billion into PBSA projects. This PBSA news spread a remarkable vote of confidence in Aareal Bank, a significant German property lender, is one of the major lenders contributing to this increase. Greystar, PIMCO Prime Real Estate, and Canada's Public Sector. By keeping refinancing at its core, Pension Investment Board has seeked an outstanding £380 million from Aareal Bank, which will act as the only arranger, lender, and security agent. Furthermore, this UK student accommodation news shows the increased investor interest in the thriving PBSA industry in 2023.

The student housing portfolio in discussion includes homes in prestigious London neighbourhoods such as Spitalfields, South Bank, and Aldgate. Aareal Bank's earlier involvement in partially funding these assets demonstrates the bank's commitment to assisting the sector's growth. Michelle Weiss, Aareal Bank's head of hotel properties, stated, "The repetitive cyclic nature and resilience of the PBSA market demonstrate its strong fundamentals”. Michelle also emphasises resisting market fluctuation and generating steady long-term profits.

Legal & General Investment Management (LIM) is another prominent lender in the UK. The company lent £400 million to Unite, one of the UK's leading PBSA operators, to refinance 23 UK student housing assets. Unite's CEO Richard Smith said the demand for new student accommodation was "driven by a number of factors, including a drop in private rental availability and a rise in student numbers."

Unite's financial performance further proves the sector's attraction. The company's net operating income increased by 10%, and rental growth was 3.5 % in 2021. These positive results are set to continue with forecasts of around 7% rental growth in 2023 and 2024. The results are from supply shortages and increasing number of students, particularly in Bristol, Durham, Manchester, Bath and Canterbury.

The number of undergraduate students is forecasted to rise to 1.75m by the end of 2023, a rise of 1.5m from 2018. Acute housing problems are becoming more visible in many UK cities. As a result of this demographic shift, there is a growing demand for new PBSA development to accommodate the increasing number of students and address housing issues.

Overall, multiple lenders in the UK funded the student housing investment of 1 billion, positioning the PBSA industry as a key player on the map in the UK property market the industry for a long-term outlook. Moreover, this significant UK student housing investment demonstrates the sector's strength. The investment appeals to established financial institutions and emerging players looking for profitable growth prospects.

‍