Privately owned student accommodation developer and operator Fusion Group has secured a substantial £500 million whole-loan facility from pan-European real estate financier Maslow Capital to fund the development of five purpose-built student accommodation (PBSA) schemes across key UK cities. This financing package is among the largest single-lender debt arrangements in the UK PBSA sector, reflecting the robust demand for well-located student housing amid a market where supply continues to lag behind demand.

The five schemes, with a combined total of 3,138 beds, are located in Birmingham, London, Loughborough, Glasgow, and Cardiff. All have secured planning permissions and are slated for completion between 2027 and 2028. Fusion Group will operate these assets under its management platform, which promises well-appointed environments featuring dedicated study spaces, fitness and wellness zones—including padel courts, gyms, and yoga studios—private dining facilities, and landscaped outdoor areas. Such amenities underscore a growing trend in the sector prioritising not only accommodation but also lifestyle and wellbeing facilities for students.

Maslow Capital, part of the Arrow Global Group with more than £8.7 billion funded across real estate projects, played a pivotal role in structuring the facility. Senior Director of Origination, Sky Mapson, highlighted that packaging a single £500 million facility across multiple schemes provided Fusion with the necessary financial leverage to deliver an ambitious development pipeline. Fusion itself has a strong track record, having delivered over 6,000 beds and holding a secured pipeline valued at £2.2 billion in gross development value, with plans expected to finally deliver upwards of 11,000 PBSA beds across London and wider UK locations.

The UK PBSA sector continues to flourish despite broader market challenges, with investment reaching £3.5 billion in 2024—marking a 13% rise from the previous year and close to an average of £4.9 billion annually over the past five years, according to Savills. This steady investment flow is fuelled by significant transactions, such as the sale of the 1,014-bed One Medlock in Manchester and the acquisition of the 836-bed Triangle site in Selly Oak by Greystar. London has also witnessed notable deals, including the sale of Kings Place (444 beds) to Unite Group, and the acquisition of Blackfriars Crown Court by iQ Student Accommodation and Blackstone. Regionally, portfolio sales in Bournemouth and Cardiff to Generation Partners, backed by Goldman Sachs, further illustrate ongoing investor confidence.

These developments tap into growing student populations in their respective cities. For instance, the Cardiff scheme—Longcross Court—with planning approval for 706 beds, is designed to meet a rising demand driven by a 73% increase in international students since 2012/13. The scheme aims for BREEAM Outstanding certification, incorporating renewable energy technologies such as air source heat pumps and photovoltaic panels, reflecting increasing environmental standards within the sector. Longcross Court will also enhance the public realm by replacing a largely vacant commercial building, adding a café and creating landscaped spaces to integrate with the local community.

In Glasgow, Fusion's £76 million Sauchiehall Street development, which received a ‘minded to grant’ approval, will provide 619 beds while supporting the regeneration of a key city centre location. The project will restore the historic arcade route through to Renfrew Street and add 9,500 square feet of commercial space. Adjustments were made to respond to community concerns by reducing the building’s height and increasing affordable accommodation to 15%, signalling a commitment to local integration and sustainability.

Meanwhile, in London’s Brent Cross Town, Fusion Group has partnered with Cheyne Capital on a £275 million PBSA scheme due to submit its planning application soon. This development will offer around 650 student beds and exceptional amenities, including study areas, a digital competitive gaming zone, fitness facilities, yoga studios, and a health kitchen with a zero-waste shop. Positioned near Brent Cross West station, which boasts rapid connections to central London universities and St Pancras International, the project benefits from excellent transport links and proximity to the first university campus outside Yorkshire for Sheffield Hallam University.

Across Birmingham and Loughborough, Fusion’s forthcoming schemes continue the high standard of design and sustainability, with BREEAM Excellent targets complementing fitness centres, social hubs, and outdoor recreational amenities. These developments underscore a consistent strategy to combine high-quality living environments with holistic student experiences.

Overall, Fusion Group’s recent financing milestone and project pipeline exemplify the resilience and growth potential of the UK’s PBSA sector, which remains attractive to institutional investors and developers alike due to demographic trends and evolving student expectations.

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Source: Noah Wire Services