NEW research has highlighted that purpose-built student accommodation (PBSA) continues to be a ‘shining light’ in the Scottish commercial property investment market.
In its latest investor research on the living sector conducted by Lismore Real Estate Advisors, 72% of investors said they are considering Scotland’s living sector in 2025, with interest highest among investment managers (86%) compared to fund investors (50%).
Lismore said the end of rent caps from could provide greater stability, supporting growth in a market already facing a housing shortage, particularly in Edinburgh and Glasgow. The research found that portfolio diversification (26.8%) is the primary driver of investment in this market, followed by minimal void risk (24.7%) and liquidity (22.3%).
Sustainability (28.3%) remains a top priority for PBSA investors, while demand is also driven by unit mix considerations (24.1%) and reliance on overseas students (23%), particularly in prime locations near Russell Group universities.
Chris Thornton, associate director of Lismore, said, “The PBSA sector continues to be one of the shining lights, performing strongly, driven by resilient demand and stable capital values, particularly in cities with a Russell Group university. Despite concerns over international student numbers, institutional investors, private equity firms and specialist platforms remain highly engaged in this sector.”
Elsewhere in the market, Lismore’s quarterly review statistics show that it has been ‘relatively slow’ start to the year. Transaction volumes in Q1 totalled £202 million, with the largest transaction being Realty’s £66.20 million acquisition of Abbotsinch Retail Park in Paisley (as part of a portfolio) from Ashby Capital.
Other notable transactions included L&G’s purchase from Glencairn Properties of the PBSA development at Lower Gilmore Place, Edinburgh for £35 million, Cervidea’s acquisition of 98 Buchanan Street/31Royal Exchange Square in Glasgow for £13.80 million and French investor, Remake Asset Management’s acquisition of the Nike Store at 18-20 Buchanan Street, Glasgow for £11.87 million.
Chris Thornton concluded: “The commercial property market remains cautious amid a mixed economic backdrop and geopolitical uncertainty, with a lack of quality stock delaying significant activity until Q2. Private capital continues to target prime city assets, while selective office yields attract opportunistic buyers.
“As spring arrives, signs of renewed momentum are emerging, particularly in the most liquid sectors – industrial, retail warehousing and living.”
The full Lismore Quarterly Review for Q1-25 is available to download HERE
