The days of students renting dingy cramped digs are coming to an end as investment in Purpose Built Student Accommodation (PBSA), the PRS and senior living rental sectors is set to reach £146bn by 2025, rising from £87.3bn in 2019, according to Knight Frank’s latest research.
Knight Frank’s inaugural Residential Investment report looked at the sector as a whole for the first time and shows that over the next five years the PRS sector is set to leapfrog Student Accommodation, in terms of size, with the capital invested and committed in the investment-grade private rented sector rising to more than the total value of the Student Accommodation sector (forecast to be £65bn).
Knight Frank also surveyed 43 leading investors, with £32bn already invested across the sectors.
35% of respondents expect to be active across all three sectors in 2024; 70% expect to be active in two sectors; 67% intend to increase holdings in residential investments over the next five years
London and Bristol emerge as key opportunity areas across all three sectors. This suggests an overlap of the different drivers for each sector to provide a favourable investment environment – from strong student demand, large-scale city regeneration and development as well as strong employment conditions, and finally a lack of senior living units.
James Mannix, Joint Head of Residential Development & Investment at Knight Frank said, “The growth of these sectors is mainly down to investor appetite for diversification, the granularity of occupiers that comes with individual units, demographic and tenure shifts and a housing policy landscape in the UK that is now embracing diversity of tenure”.