What's Happening?
The UK's purpose-built student accommodation (PBSA) sector experienced a significant investment increase in 2025, reaching £4.3 billion, marking a 10% rise from the previous year. This growth is attributed to strong institutional interest in the sector,
as reported by global property consultancy Knight Frank. The year saw 79 PBSA transactions, a 20% increase from 2024, with a notable rise in portfolio-level transactions. Despite the increase in investment, the supply of new beds remains below the pre-pandemic average, with 19,600 new beds completed in 64 schemes. London led the construction output with 4,350 beds, followed by Nottingham and Leeds. The sector's growth is supported by strong student demand, with a record number of university applications for the 2026/27 academic year.
Why It's Important?
The surge in investment in the PBSA sector highlights the growing demand for student accommodation in the UK, driven by increasing university applications and international student interest. This trend reflects the sector's resilience and attractiveness to investors, despite challenges such as planning and regulatory constraints. The investment in PBSA is crucial for meeting the housing needs of a growing student population, which in turn supports the higher education sector and local economies. The focus on portfolio-level transactions indicates a shift towards larger-scale investments, which could lead to more efficient management and development of student housing projects.
What's Next?
Looking ahead, the PBSA sector is expected to continue attracting investment, with a pipeline of 50,250 beds currently under construction. However, the sector faces challenges such as planning delays and regulatory hurdles, which could impact the pace of development. Investors and developers will need to navigate these challenges while capitalizing on the strong demand for student accommodation. The sector's growth will likely lead to increased competition among investors, driving innovation and improvements in the quality and sustainability of student housing. Additionally, the shift in student preferences towards higher-tariff universities may influence future investment strategies.
