PBSA update – supply growth in London, breaking into the US sector

In this mini update, Property Investor Today looks at the latest in purpose-built student accommodation (PBSA), from the locations with the most supply growth, to GSA’s expanding presence in the US PBSA sector.

London leads the race with strong PBSA supply growth

London’s PBSA bed supply has increased by 3,216 units for the 2021-22 academic year, with a 3.7% uplift year-on-year, according to student accommodation search platform, StuRents.

Sheffield, in the North of England, followed close behind, securing  1,850 new beds within the same period.

The research also showed an uplift in Brighton (+1,681), Liverpool (+1,562), Lincoln (+1,176) and Manchester (+1,157).

This comes as the PBSA sector continues to attract investors despite the temporary disruptions brought by the pandemic, affecting international students’ ability to travel into the UK.

According to the latest UCAS data, the number of accepted students from the UK and outside of Europe is on the increase, having risen by 1.4% and 2.4% respectively, with higher tariff providers recording a year-on-year increase (1.3%) in acceptances, sending a reassuring signal to the investment community.

The number of acceptances from EU domiciled students, however, saw a significant decline of 50.4%.

While London maintains the largest pipeline of nearly 15,000 student beds, Nottingham, Bristol, Leeds, and Birmingham also enjoy healthy pipelines, meaning students could have access to a greater variety of accommodation options in the years to come.

Richard Ward, head of research at StuRents, comments: “Despite the uncertainties caused by the pandemic and a significant decline in EU student acceptances, the UK PBSA sector remains a sought-after asset class among private and institutional investors.”

“Certain university cities and towns attract disproportionately high volumes of PBSA investment due to a perceived shortage of stock [in those locations], but very often, those markets are far from being undersupplied. With that in mind, we would encourage all those looking to deploy capital to do their due diligence and analyse fundamentals on a case-by-case basis to maximise returns on their investment and avoid disappointment.”

GSA builds momentum in the US with new acquisition

Global Student Accommodation (GSA), the global leader in student housing, has acquired a portfolio of 1,450 beds across four student housing assets from real estate investment and development firm Rael Development Corporation.

The acquisition comes just two months after GSA announced a joint venture (JV) partnership with a fund managed by Morgan Stanley Real Estate Investing (MSREI), with a vision to become a leader in the US student housing.

GSA’s portfolio is now present in 29 cities and 22 states across the US. All properties in the latest transaction are excellently located close to Power-5 or Group of 5 schools and demonstrate the strong fundamentals that underpin this resilient sector. 

The acquisition also marks GSA’s entry into Fayetteville, Arkansas, adding the prestigious Power-5 school of the University of Arkansas to its portfolio. The remaining three assets are located in GSA’s existing markets, consolidating the company’s presence and creating significant operational collaborations. 

GSA says it has experienced unparalleled growth in the US since entering the market in December 2020 and is ideally positioned to secure further pipeline opportunities as specialist in the sector.

This acquisition delivers against the company’s plan to actively pursue strategic growth in the US with MSREI as a long-term partner, as well as its wider strategy to increase geographical diversification as a global provider of student housing.  

The properties will be re-branded under, and managed by, Yugo, GSA’s global operating partner. Yugo’s student-led and sustainable approach is a ‘key differentiator’ in the US student housing market, with unique initiatives to support students’ journeys through higher education. 

Robin Moorcroft, transaction director at GSA, says: “This is another important acquisition for GSA, and the first following the establishment of our US JV with Morgan Stanley Real Estate Investing. It signals our deliberate growth strategy in action and our focus on delivering long term income growth.” 

Aly El-Bassuni, chief executive officer of Yugo, adds: “I’m delighted to be bringing Yugo’s operational expertise to these properties and creating a unique student customer proposition in partnership with GSA.”