PBSA sector bounces back after Covid lockdown

The UK’s purpose-built student accommodation (PBSA) sector has bounced back after the Covid lockdown and is now worth £4 billion - and could be worth £4.5 billion by 2025, research reveals.

PBSA specialists and property developers Stripe Property Group, says that the sector has grown in value over the past 10 years by 67% and was worth 2.4 billion in 2013 but fell in size in 2021.

However, the sector reached a peak in 2020 with a value of around £4.1 billion but it fell by 21% in 2021 to £3.2 billion.

Stripe says this fall was down to levels not seen by the PBSA sector since 2016 and was driven by Covid lockdown restrictions that prevented students from pursuing their higher education courses in person.

PBSA sector’s value will hit £4.2 billion

But now, Stripe is forecasting that this year, the PBSA sector’s value will hit £4.2 billion, which is an annual growth rate of 6%.

And the sector will continue growing and will increase by another 8.1% by 2025 to be worth £4.5 billion.

The managing director of Stripe Property Group, James Forrester, said: "While pandemic restrictions were problematic for many areas of the UK property market, the PBSA sector was hit particularly hard by the almost immediate reduction in demand for student housing, as higher education was no longer pursued in a physical format.

"This brought about a notable reduction to the market size of the sector, and we're still feeling the impact of this downturn today."

‘Pandemic will be nothing more than a memory’

He continued: "However, we are heading in the right direction, and we predict that the impact of the pandemic will be nothing more than a memory by the end of this year.

"The returning health of the PBSA sector has been driven by a return to normality for many students, and purpose-built student accommodation is once again in very high demand.

"We've seen the stories around the shortage of suitable accommodation to meet demand, and so the vital role played by the PBSA sector is only going to grow in importance as the years go on."

‘Importance of student accommodation provision’

Simon Thompson, the managing director of Accommodation for Students, said: “News that PBSA has bounced back in value illustrates the worth and importance of student accommodation providers in the UK.

“It also reflects the strong demand for quality accommodation and PBSA and private student landlords offering quality homes will always see their properties being snapped up.”

Average rents grew in March

The average rent for a property in the UK has been revealed with HomeLet’s latest rent index.

The firm says that prices in March rose by 0.8% since February to hit £1,184.

The data shows that rents in every UK region have risen over the month and over the year.

When rents in London are excluded from the figures, the average rent is 9.1% higher than it was a year ago at £983.

However, rents in London are 11.8% higher than they were in March last year and are 0.2% higher since February.

HomeLet’s chief executive, Andy Halstead, said: "With every region of the country reporting a month-on-month rental price rise, it’s fair to say that demand for rental properties remains exceptionally high.

“It had been interesting to observe a few months of decreased prices in London, but the capital appears to have recovered from a slight dip, in line with rises across the country.”

He added that a shortage of homes to rent means the market remains ‘competitive’.