The property consultancy’s latest UK Student Housing Market Update revealed just shy of £750m worth of UK PBSA transactions completed in the first three months of this year, a significant uplift on the £148m of investment recorded a year ago.

A total of 21 PBSA deals took place but, despite improvement in the sector, volumes were still down on Q1 2021 and 2022.

"While total deal volumes are down compared to recent years' peaks, the sector's strong performance reflects investors' confidence in its long-term prospects,” said Merelina Sykes, joint head of student property at Knight Frank.

The report’s transactional evidence suggested PBSA yields have proven notably more resilient than many other traditional real estate sectors, shifting by only approximately 50-75 basis points from peak pricing.

The analysis pointed to deal structures shifting to account for the ongoing challenges in the funding market.

While funding is available for key assets in prime university towns and cities, JVs are being utilised more in secondary locations.

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Knight Frank’s assessment of future PBSA investment suggests London has the largest pipeline of around 26,000 student beds either under construction or with planning granted.

Other major markets include Manchester (10,500), Bristol (8,700), and Nottingham (7,600).

“With money markets betting on two interest rate cuts in 2024, any improvements on the debt environment will boost transactional activity, but the focal point this year for the PBSA market will be on politics and policy,” commented, Katie O'Neill, head of student property research at Knight Frank.

In January, tough government action on student vias came into effect, with international students no longer able to bring family members to the UK in a bid to “curb abuse of the immigration system”.

“It is important that policymakers do not to conflate student visas with actual student numbers, with many students securing visas for multiple countries,” added Katie.

“Without a greater understanding of this and the economic benefits international students bring, there is a real risk of an over-correction, which ultimately has knock on effects for the financial health of the UK’s higher education sector.”