Investor Interest Rises for Student Accommodation in UK

Investor interest in student accommodation has skyrocketed, with the sector's appeal climbing from the 10th position to the top spot within just two years. This exciting development was revealed in Investec Real Estate's third Future Living report, reflecting the robust optimism surrounding student housing in UK. According to the report, in 2023, a staggering 59% of respondents expressed confidence in the sector, marking a substantial leap from the meagre 27% in 2021. This newfound enthusiasm has propelled student housing in UK ahead of distribution and logistics, making it the most sought-after investment category. It also states that investors are intending to invest an average of £248 million in the living sector in the next year, which is more than twice the £113 million reported in 2021.

This surge in interest is driven by a combination of societal and demographic trends that were accelerated by the pandemic, along with a noticeable shortage of available properties. According to PBSA news, 62% of the people surveyed plan to put more of their investment money into student housing in the UK in the next five years. This marks a significant increase from the 40% who had this intention in 2021. This transformation can be attributed to the student accommodation in UK sub-sector's robust structural drivers, which are relatively immune to broader economic fluctuations. 

Jonathan Long, head of corporate lending at Investec Real Estate, stated “The UK living sector has been our strongest conviction call over the past decade and it is enjoying a prolonged period of global institutional investor support.” The Future Living report's insights were drawn from a survey of 50 global institutional investors representing £442 billion in assets under management, shedding light on the evolving landscape of the student accommodation sector's bright future.

According to the report, approximately 77% of investors have noticed that recent economic ups and downs have made sustainability less important for them and companies. However, at the same time, 78% of investors are interested in getting financing, which is connected to sustainability in the next year. But for other types of student housing in UK, 40% - 48% of investors want to invest less. This indicates they still understand the advantages of making their investments more environmentally friendly.

Notably, while there's much talk about 'Leveling Up,' London remains the most favored investment location for student housing in the UK. However, 79% of investors are allocating more capital outside of London than they were just a year ago. Simultaneously, 

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