Knight Frank reported this week that the purpose-built student accommodation market hit a record £7.2bn of investment in 2022. More than £4bn was invested in the final quarter of the year alone (Greystar's purchase of the Student Roost portfolio making up the largest chunk of that investment). Such particularly strong investment volumes fly in the face of the challenges faced by the commercial real estate market as a whole, especially since the second half of last year. 

Perhaps the Student Roost deal skewed figures positively somewhat, but deal volumes are expected to pick up again in 2023 and that continues to support the counter-cyclical nature of the sector. Student numbers often rise in recessionary periods, and there continues to be a chronic under-supply of student accommodation. Strong operational figures have even out-performed expectations for the current academic year (e.g. Unite have reported 99% of beds across its portfolio were let, against its expectation of 97%). Rental growth therefore remains the expectation.

According to the report, the economic challenges, such as higher financing costs, have resulted in yields softening in Q4-2022 (up by 0.25-0.50% since October). Knight Frank expect there may be a further softening this year, with greater stability and yield compression expected from 2024. 

It will be interesting to see how this affects total transaction volumes - I wouldn't bet against the PBSA sector again out-performing its pre-pandemic figures of £5-6bn again.