Purpose Built Student Accommodation Valuation Viewpoint Q1 2020 – Knight Frank UK
In the UK transactions surged at the end of 2019 resulting in a record year of £5.3bn transacting in the PBSA sector. Q4 saw the completion of Unite’s purchase of the Liberty Living portfolio of 25,000 beds for £2.2bn reflecting a yield of 5.30%. Before the year end, Singapore Press Holding’s purchased Student Castle’s portfolio for £448m.
In continental Europe, transaction volumes rose again in 2019 to an estimated €2.4bn. Notable transactions include the purchase of the Groupe Kley portfolio comprising 5,800 beds across France (2,500 operational and 3,300 pipeline). This was purchased by AXA Group for an estimated €360m.
Investment appetite remains robust despite the current political and economic uncertainty. Prime direct let yields in London were at or around 4.25% since late 2015, however, a recent flurry of activity in the capital indicates that prime yields are now comfortably at 4.00% or keener. This is driven by a continued challenging planning regime and with the restrictive Draft London Plan which is further restricting student development opportunities. This is evidenced by The Curve and The Project at Hoxton transactions …